The Wasde report from the United States Department of Agriculture (USDA) released Friday, June 10, is reasonably in line with analyst expectations. The soybean quotation on the CBoT has been on the rise in recent days due to shortages in the market. This was confirmed once again in the Wasde report. How to interpret the forecast for wheat is more difficult due to the logistical problems.
In the June edition of the Wasde report, the USDA assumes a smaller wheat crop, lower consumption, fractionally less world trade and a marginally lower closing stock. The total amount of wheat this season (end stock 2021/2022 season plus the 2022/2023) harvest stands at 1.052,8 million tons. That is 1,7 million tons lower than in the previous edition of the Wasde report. The Indian harvest has been reduced by 2,5 million tons to 106 million tons due to extreme heat. According to the USDA, the Russian harvest is 1 million tons higher due to favorable weather, bringing it to 81 million tons.
Wheat consumption is forecast to be 786 million tons, or 1,5 million tons lower than the May edition. According to USDA analysts, 204,6 million tons of wheat are traded on the world market. That is 300.000 tons less. Increased exports from Russia and Uzbekistan almost make up for the lower exports from India. The closing stock of wheat is forecast at 266,9 million tons. This means that the stock is 200.000 tons lower and the smallest stock in six years.
Availability
Production, demand and grain balance are important factors in trade. However, the logistical problems are not considered in the Wasde report. Russian exports are significantly increased compared to last season. Several experts wonder whether this is realistic in view of the problems in the Black Sea region. The wheat can be there, but you also have to be able to get it to the buyers.
For soy, the USDA has increased its closing inventory for the 2022/2023 season by 900.000 tons to 100,5 million tons. This is mainly due to a higher initial stock due to a larger harvest last season in Argentina and Brazil. For the US, the Wasde report has revised initial inventory downwards due to better-than-expected exports. With an unchanged harvest and consumption, the American closing stock will be lower as a result. The USDA is thus sending a clear bullish signal, according to analysts. Tightness in the soy market has already clearly been priced in on the CBoT in the past week. The correction in the share price after the publication of the report therefore does not come as a complete surprise to analysts. The world's closing stock of maize is estimated at 310,5 million tons. That is 5,3 million tons more than in the previous edition. However, the ratio between consumption and stock remains historically tight, according to experts. As with soy, this was already incorporated in the price.