The US Department of Agriculture's WASDE report had little impact on the grain market. The report brought few surprises. The phase 1 trade deal between the United States (US) and China has more influence on the market.
Although the January report of the US Department of Agriculture's (USDA) global supply and demand report is the most comprehensive of the year, it had little impact on the market. The report published the expected acreage figures for the grains in the US.
The most important thing the market was waiting for were figures on the winter wheat area in the US. However, the ministry's estimates brought few surprises: they were roughly in line with trade expectations.
Smaller wheat stocks
Eyes were focused on this winter wheat area because sowing was clearly delayed due to wet conditions. The wheat area ultimately amounts to approximately 12.5 million hectares, according to the USDA. That is 1% smaller than last year. Furthermore, the US Department of Agriculture expects wheat production in the US to remain approximately stable, while consumption increases. This also reduces inventory.
Worldwide production is expected to be 1 million tonnes smaller, mainly due to smaller yields in Russia and Australia. As consumption increases, stocks decrease by 1.2 million tons. The WASDE report therefore supports the wheat price.
Higher hectare yields
As for soy and corn it brought WASDE report more surprises. Trade expectations were that U.S. corn and soybean production would be cut. Instead, expected hectare yields for both grains have increased slightly. Although fewer hectares can be harvested for both crops, the total production is therefore slightly higher than expected.
US soybean production is estimated to be 0,22 million higher, bringing the total expected soy yield to 96.8 million tons. This while 242.000 hectares less have been harvested due to the wet conditions. Although maize production was also estimated to be slightly higher, this was offset by significantly higher feed consumption.
Trade war has greater influence
Ultimately, the trade war has a greater impact on the soybean and corn market than the WASDE. The phase 15 trade deal between China and the US is expected to be concluded on Wednesday, January 1. The soybean price is expected to rise further as a result. China's soy imports are already rising in the run-up to this deal. China has imported the most soy per month from the US since May 2018. This is mainly due to a growing pig herd in China.