The United States Department of Agriculture (USDA) lowered its closing stocks for wheat, corn and soybeans this week. How are the various markets reacting to this fourth relatively positive USDA report?
The ministry does not expect any changes in the planted or harvested wheat area for the 2020 season, but does expect lower yields. Because the hectare yield is lower, total production drops by 326.583 tons to 49,53 million tons. In addition, the agriculture ministry expects demand to increase by 272.153 tons. This results in a decrease of approximately 1,14 million tons in the final stock, which amounts to 24,03 million tons. The decline in the harvest is one of the reasons why the wheat quotation on the CBoT is taking another step upwards. The quotation of $6,25 per bushel is the highest since 2014.
Expectations for the global wheat harvest are less favorable. The USDA still assumes a record wheat supply. World stocks are estimated at 321,6 million tons, which is 2,1 million tons more than forecast last month and almost 5 million tons above expectations.
Closing corn stocks down
The planted corn area has been adjusted downwards by more than 400.000 hectares and the ministry has also reduced the harvested area by 382.832 hectares. The figures have been significantly adjusted, especially in the states of North Dakota, South Dakota, Iowa and Minnesota. In addition to reducing acreage, the USDA has also reduced hectare yields. As a result, total production drops by 4,52 million tons to 373,9 million tons, which is 2,36 million tons below expectations.
The figures on the demand side have also been adjusted downwards. For example, the USDA reduced both the demand from the animal feed industry and the demand from the ethanol industry by 1,27 million tons. It results in a closing stock of 54,8 million tons. This is more than 165.000 tons more than expected, but 8,5 million tons less than last month's forecast. The quotation on the CBoT is now $4,02 per bushel, well above the level of recent years.
The progress of the maize harvest is ahead of previous years. For example, 94% of the corn is already ripe, while the average in this period is 87%. 41% of the harvest has been completed, against an average of 32%. Experts expected that about 39% of the harvest would be completed at this time. On the other hand, the quality has decreased by 1% to 62% in the 'good to excellent' category.
Soybean harvest is ahead
The harvested area of soybeans has been reduced by 242.811 hectares by the US Department of Agriculture. It is striking that the yield per hectare has remained unchanged, which means that the total production of soybeans has 'only' been reduced by 1,2 million tons to 116,2 million tons. The closing stock is therefore expected to be 7,89 million tons, which is 4,6 million tons less than last month and 1,6 million tons less than expected.
Soy crop progress is estimated at 61% complete, versus an average of 42%. The major soy producing states estimate harvest progress to be 10% to 30% higher than average. However, the quality has also fallen slightly here, to 63% in the 'good to excellent' category.