The Wasde report has a record high grain harvest for wheat, maize and soy during the March report. On the other hand, there is also a worldwide record demand for the three commodities. As a result, closing stocks are slightly higher, which in turn has a slightly negative effect on the price.
On Thursday, March 9, the US Department of Agriculture released its monthly Wasde report for the global grain market. This brings few big surprises for stock traders and analysts. Still, the CBoT closed lower for corn, soy and wheat. The latter recorded the lowest loss. Soy had to lose almost 11 cents for the May contract. Corn almost 6 cents.
The eyes of the global grain market are still on South America. How is the maize and soybean harvest going in Argentina and Brazil? All crops are adjusted upwards by the USDA or remain the same. The expectations for soy in Brazil in particular have been revised upwards. From 104 to 108 million tons. The maize harvest in that country went from 86,5 to 91 million tons. The larger harvest also has an effect on exports. For soy, this is expected to increase by 12 percent compared to last year. The total global soybean harvest will also be increased by 4 million tons, but more demand will absorb that. US inventories are increasing as exports decline.
The Brazilian maize harvest is at a much higher level than was the case last season. Almost 40 percent more. This is expected to double the export from the country. Despite higher global stock levels, stocks are rising worldwide. In the US, considerably more maize is processed into ethanol, however, the demand for maize for animal feed is decreasing, so that the final stock remains the same.
The USDA is increasing the worldwide closing stock of wheat to 250 million tons. An increase of 1,3 million tons, thanks to more production in Argentina and Australia. The latter is expected to reach a production record of 35 million tons in the 2016-2017 season. There is also more demand on the wheat market. Especially from India, for which the ministry is increasing demand to 5,5 million tons this season. An increase of 1,8 million tons compared to the previous report. US closing stocks have been revised downwards.
Records achieved in production meet the record demand for maize, soy and wheat. However, Brazil is harvesting bin-busting quantities of soy, which is offset by the largest Chinese soy demand ever. The question is therefore: How many years can arable farmers worldwide keep up with global demand, which sets a new record every year. The bar is also high for the 2017-2018 season due to the enormous demand for raw materials.
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