In their monthly supply and demand report, the US Department of Agriculture USDA opens the way for an (even) higher soybean price. It estimates global production and ending inventory lower. For wheat and maize, the report has tempered their expectations.
On Wednesday evening, February 9 (Dutch time), the USDA published its monthly World Agricultural Supply and Demand Estimate (WASDE). The figures came too late for the European grain market. The trade will of course pre-sort. Both wheat and corn prices fell on the Matif in Paris. Wheat closed at €262,75 per tonne and corn at €250,25.
Rally on soy
The American CBoT closed on a positive note. The figures presented were particularly positive for soybeans. The closing price was $585,69 per tonne. That is the highest price since early May. The difference with Tuesday was more than $9 per ton. Corn prices climbed $5,50 to $254,42 per tonne. Wheat gained $1,83 to close at $288,25. That is the equivalent of €251,91.
Drought in South America is causing a significant reduction in the soy harvest on the continent. The Americans shaved 8,7 million tons of the global harvest. Especially because Brazil is expected to harvest 5 million tons less soy. Argentina accounts for -1,5 million tons and Paraguay -1,8 million tons. This reduction follows a downward one correction from 9,2 million tons that the USDA did in January.
Correction at world level
In the past four years, the USDA has corrected world production by 21,3 million tons, meaning that the world market is no longer looking at enormous production. However, the volume is still higher than the previous season. Nearly 340 million tons were harvested then compared to 364 million tons now. Brazil still produces 5,5 million tons more soy than a season ago. The US has produced 24 million tons more soy this season.
However, that plus quickly evaporates when you compare it with the increased demand for soy. According to the USDA, this now amounts to 369,2 million tons in the current season. Last season that was 10,8 million tons less. It is therefore not surprising that the global final stock will shrink from 95,6 to 92,8 million tonnes. The demand for soy is mainly in China (+4,5 million tons). The EU is estimated to import 400.000 tons more this season.
Wheat marginally adjusted
As far as wheat is concerned, these figures are much less shocking. US ending inventory has been adjusted upward by 20 million bushels. Strangely enough, export expectations have also been corrected negatively. According to the ministry, this is due to fewer sales and less shipping traffic. The global ending stock has been reduced in the current report. From 280 to 278,2 million tons. World wheat production has also been reduced by 2,2 million tonnes. Especially because less wheat is harvested in the Middle East due to drought, it is estimated.
There is more demand for wheat worldwide. As a feed raw material - because corn is more expensive - but also from Canada because that country has harvested significantly fewer grains.
For grain maize, world production has been corrected by 1,6 million tons. Again because dry weather in Brazil means a smaller harvest. Production here has been reduced by 1 million tons, but is still 12 million tons more than last season. The demand for corn worldwide has trimmed slightly, creating space in the final stock. The global grains sector had expected slightly more positive figures and still expects the final stock to be lower, around 300 million tons. The latest USDA estimate is 302,2 million tons. It is mainly China that needs more corn (16 million tons extra). There were no changes to the American figures for production, processing and inventories.