US commodities markets reacted violently on Friday, August 10, following the release of the WASDE report. Wheat also came in lower, while the situation there is clearly negative (and therefore bullish). In the longer term, it is soy and maize that are expected to struggle with low prices.
According to the USDA (US Department of Agriculture), global wheat production for the 2018/2019 season is around 730 million tonnes, which is 28,4 million tonnes below last year and 6,6 million tonnes lower than the July forecast. Still, both the CBoT and Matif ended lower, true analysts expected even steeper declines. Moreover, the American spring wheat harvest is looking good.
Dark clouds over futures market
The ministry is positive about the yield of grain corn, which increases the total volume in the United States (US). Last month it wrote about a yield of 174 bushels, which has now been adjusted to 178,4 per acre. Analysts doubt the feasibility. The same goes for soy, where ending stocks are expected to increase from 580 to 785 million bushels. Stock market traders find this news (if it is the truth) difficult to process. The figures hang like a dark cloud over the CBoT.
Wheat production in the European Union (EU) leads the list when it comes to a lower grain harvest. This will have little effect on the prices of corn and soy. The USDA thinks this is the lowest harvest since the 2012/2013 season. In Germany, wheat yields have been hit the hardest. The USDA adjusted the Russian yield figures upwards by 1 million tons, as a result of a better spring wheat harvest.
Low EU exports
The Americans are gloomy about the EU's exports. They estimate this to be the lowest level in 6 years. Russia remains in the lead on the world market, the USDA expects. World consumption is estimated to be 5 million tons lower. Especially because the EU and Russia purchase less feed grain.
Concerns about the drought Australia continue to exist, but the USDA does not tinker with wheat yields. The Canadian grain harvest is also being questioned, because it is also dry and warm here.
Sky-high yields
The futures markets once again recorded red figures on Monday morning, August 13. The Matif for wheat opened €2,75 lower and that of maize €1,90 lower. Analysts do note that the USDA is always positive when it comes to acre yields, which brings bearish news. The low European grain harvest is a fact. However, crops in the US must do everything they can to achieve such high production figures.