The WASDE report from the United States Department of Agriculture (USDA) has sharply reduced wheat yields in Australia. In addition, the maize harvest in the United States (US) was surprisingly reduced. What consequences does that have?
The market was banking on 'bearish' news: higher wheat inventories in the US, compared to the September report. This is confirmed with an increase of 2%, but this increase was less than expected.
Global wheat stocks have been reduced by 1,1 million tons, putting them about 5% below last year's record stocks. Wheat production has also been reduced; Lower yields in Russia and Australia are the main reason for this. The Australian harvest has been reduced by 1,5 million tonnes to 18,5 million tonnes.
Further reductions Australia
Local experts expect Australia's wheat harvest and exports to be further reduced, but understand that the report imposes a reduction of 1,5 million tonnes for the time being. The west of the country has been affected by this for some time snow and frost, while the east with extreme drought struggling.
Reduction in maize yield
It was striking that American corn yields were reduced, partly due to the wet weather side. Despite the deep cuts, global corn stocks are rising to nearly 160 million tons. That is an increase of 2,3 million tons.
Although the corn price rebounded due to the above information, it remains interesting to capture corn. Especially in relation to the current wheat price.
Soy stocks less than expected
In addition, the market also expected an increase in the ending stock of soybeans in the US. That was also the case, but stocks rose less quickly than expected (+1,8 million tons worldwide). The harvest is also larger than expected.
In addition, the trade war still plays a role. Even though prices on the South American market (Brazil and Argentina) are higher than the price for American soy (including tariffs), China still refuses to buy soy from the US.