The wheat listing on the CBoT in Chicago has fallen sharply for the second day in a row. The Wasde report of the United States Department of Agriculture plays a major role in this. The report itself contained no major surprises, but that news also sets the extremely volatile markets in motion.
The US Department of Agriculture (USDA) accountants kicked off the March issue of the Wasde report by saying that this report "contains an initial assessment of the short-term effects of the military action." For wheat, the ministry anticipates that production will be higher, world trade and consumption will be lower and that the closing stock will increase compared to the previous edition.
This higher production is largely attributable to Australia, where the wheat harvest has been revised upwards by 2,3 million tons to a record 36,3 million tons. World exports fall by 3,6 million tons. Ukraine's exports are estimated to be 4 million tons lower, at 20 million tons. Russia exports 3 million tons less and, according to the ministry, comes out at 32 million tons. This loss is partly offset by Australia and India, where exports are increasing by 2 million tons and 1,5 million tons respectively.
Greater wheat stock
For many regions, including Turkey, Egypt, the European Union, Afghanistan, Algeria, Kenya, Pakistan, Tanzania and Yemen, it expects imports to be lower. This is partly because there is less wheat available from the Black Sea region, but also because of the high prices. Wheat consumption decreases by 0,8 million tons, to about 787,3 million tons. The closing stock has been increased by 3,3 million tons to 281,5 million tons. In Russia and Ukraine, the stock is increasing due to the problems with exports, while in Turkey, India and the European Union the stock is actually lower than in the previous edition.
The wheat quotation on the CBoT already showed a decline before the publication of the Wasde report. It continued into the trading day. The March contract is down 6% to $1.199,50 per bushel. Converted that is €399 per tonne. Analysts signal that physical exports from the United States have not increased significantly since the outbreak of the war in Ukraine. Wheat prices are relatively high in the United States, Australia and the European Union. That discourages buyers from doing business.
Shortage in soy
Soy production is falling, according to the Wasde report. Consumption, world trade and the closing stock are also lower. The harvest has been reduced by 10,1 million, compared to the previous report, to 353,8 million. At 127 million tons, the Brazilian harvest is about 7 million tons lower, and less soy has also been harvested in Argentina, Paraguay and Uruguay. Due to the relatively high prices for vegetable oils and scrap, the demand for these products is growing less rapidly than previously anticipated by the USDA. The closing stock has nevertheless been revised downwards by 2,9 million tonnes to 90 million tonnes. That is the smallest stock since the 2015/2016 season.
The production of coarse grains (all grains, except wheat and rice) has been revised upwards by 1,5 million tons in the current season, compared to the February edition of the report: to 1.498,9 million tons. The maize harvest from Russia and India is larger, which means that the small harvest in South Africa and Argentina is largely compensated. The maize exports of India and the United States are larger, while Ukraine exports less maize. The closing stock of maize is 1,3 million tons lower, to 301 million tons. In Ukraine, Russia and India the closing stock is higher.