The US Department of Agriculture has made significant adjustments, especially to corn and soybean yields and stocks. As a result, corn and soybean shot to the highest level in two months on the CBoT last trading session. That didn't come as a complete surprise to analysts. The wheat market has been relatively untouched by the USDA.
The September wheat contract on the Matif closed yesterday €0,75 lower at €330,25 per tonne. Trading on the September contract has concluded and the Matif has now moved to the December contract which closed yesterday at €335,50 per tonne. On the CBoT, wheat fell 1,4% last trading session. Corn and soy fell by 1,9% and 3,8% respectively.
The USDA's Wasde report is one of the driving forces behind the grain market rally. The yield expectations for soy in the US in particular were still lower than what the market had expected in advance. The USDA cut the U.S. soy crop to 4,378 billion bushels. Analysts estimated the yield before publication of the report at 4,496 billion bushels and in the August edition of the Wasde report the USDA expected a total yield of 4,531 billion bushels. The corn harvest in the US is also lower in the report than the market expected, but here the difference is less large, 13,944 billion bushels compared to the 14,088 billion bushels expected by the trade. Remarkably, the yield per acre is the same in both expectations at 172,5 bushels per acre.
Minor adjustments in wheat
In wheat, the USDA made marginal adjustments. The total available wheat (initial stock plus the harvest) will be increased by 3,6 million tons to 1.059,6 million tons. This is largely due to the large Russian wheat harvest, which has increased by 3 million tons. Global wheat demand will increase by 2,4 million tons to 791 million tons. In particular, more wheat will be used for feed and other applications. The final wheat stock will then amount to 268,6 million tons. That is an increase of 1,2 million tonnes compared to the August edition of the Wasde report. This extra stock is mainly located in Ukraine and Russia, while the EU wheat stock is actually shrinking.
According to experts, it will be interesting to see what American corn and soy growers do in the coming weeks. The harvest is slowly getting underway. Prices have increased in recent weeks. In the Wasde report, the USDA assumes that the shortage on the grain market will worsen rather than decrease this season. The USDA thus provides a bullish signal to the market. This may be an incentive for farmers to temporarily store corn and soy instead of selling immediately at harvest. After all, prices have already been at significantly higher levels in the past six months. On the other hand, farmers also need cash to finance inputs for the coming season.