The Wasde report from the United States Department (USDA) has already caused several surprises in the grain market in the past year and this is no different. Given the recent price trend on the Chicago exchange, the market appeared to be looking at bearish news in this month's report. That turned out differently.
A smaller supply, slightly higher consumption, increased trade and smaller ending stock is how the USDA describes what is going on in the global wheat market. In total (initial stock plus production), the USDA estimates that 2021 million tons of wheat will be available for the 2022/1.063,2 season. That is 1 million less than in the October edition of the Wasde report.
European harvest adjusted
This is due to a smaller initial inventory and smaller production. The harvest for the current season has been adjusted 0,6 million tons lower to 775,3 million tons. This is mainly due to a revision of the actual harvest in Germany and France. The Russian Ministry of Agriculture adjusted the yield upwards by 2 million tonnes, but this did not compensate for lower yields in the EU and the UK. World wheat consumption increased by 0,4 million tons to 787,2 million tons. Russia, Iran and Turkey need more wheat for feed and other uses. The wheat price on the CBoT therefore rose after the publication of the report.
More corn for ethanol
The US corn harvest is estimated at 15 billion bushels (approximately 381 million tons). That is 43 million bushels (1,1 million tons) higher than in the previous edition of the Wasde report. However, use is increasing slightly more. More corn is needed, especially for the production of ethanol. The USDA estimates consumption for that application to be 50 million bushels (1,3 million tons) higher. The American ending stock is therefore 7 million bushels (0,2 million tons) lower. World corn production is estimated at 1.499 million tons, which is 5,1 million tons higher than in the previous report. The closing stock increased less by 2,7 million tons to reach 304,4 million tons.
Less soy
The US soybean crop has been revised down 23 million bushels (0,625 million tonnes) to 4,42 billion bushels (120 million tonnes). Due to lower demand, the American ending stock will increase by 20 million bushels (0,54 million tons). World production fell by 1,1 million tons compared to last month to 384 million tons. The global final stock will shrink by 0,8 million tons to reach 103,8 million tons.
According to analysts, the soy market seemed to be under the spell of price-pressing news last week: good harvest expectations in Brazil to disappointing imports from China. The market did not take a neutral or bullish report into account. The price of soy on the CBoT therefore rose.{{dataviewSnapshot(40_1636530658)}}