The US Department of Agriculture released the new WASDE report on Friday, November 8. The report was eagerly awaited as the market in the country requires clarity about the maize and soy crops. There was also news about the global wheat harvest.
Due to technical problems at the Ministry of Agriculture, the report was published later. It usually appears at 6 a.m. Dutch time. Not all traders and markets have therefore had a chance to absorb the news and take a position.
corn crop
The most anticipated yields from grain maize and soybeans were expected. Never before has the sown been so late in the year and the season has been so extreme. This makes the market uncertain about the expected yield. The ministry lowers its revenue forecast from 168,4 bushels to 167 bushels per acre. This was in line with expectations and resulted in bullish news.
However, that euphoria was short-lived. The ministry also reduced processing to ethanol and animal feed use. The closing stock ended up higher than what the trade thought. This again resulted in 'bearish' news. The area to be harvested remained unchanged.
Soy remains untouched
The prognosis for soy is special, because the USDA has left it untouched. Traders expect that a final figure will not be given until the January report. Since sowing was done so late, the analysts are not able to estimate what the yield will be. In addition, the market has been impacted by statements by President Donald Trump about the trade war with China. He reported that the rates will remain in place for now. These uncertainties affect the market the most, which makes for a very volatile picture of the future.
Global soy production, but also consumption, are both estimated to be lower. Also taken into account for the oilseed market is a lower rapeseed harvest in the European Union and Australia.
The USDA also gave a pendulum to the wheat production of Russia, Ukraine and the European Union. These have been increased to 74 million, 29 million and 153 million tons respectively. In the United States, however, the harvest was slightly reduced (42 million bushels) due to a bad summer wheat harvest.
More wheat worldwide
Americans expect the harvested volume of wheat to grow faster than consumption, leading to an imbalance and rising stocks. This is likely to result in more trade. The closing stock worldwide is estimated at 2019 million tons for the 2020/288 season, with a 3% higher consumption.
Due to the drought in Australia, the forecast for wheat is 800.000 tons lower. Argentina also had to process a minus of 500.000 tons, although a harvest of 20 million tons remains a record for this South American country. The large stock of American wheat is weighing on the world market. Only low prices and a favorable dollar exchange rate can reduce the stock.
Futures
On Friday, November 8, the December contract on the Matif for wheat closed in tandem with the previous day: €178,50 per tonne. The stock market will probably not respond to the WASDE report until Monday 11 November. Wheat and soybean markets closed lower on the CBoT. Corn finished 80 cents higher.