Frontier Agriculture
Member
World markets
US wheat made small gains yesterday, finding some support from strength in corn and beans despite negative USDA data for wheat. The USDA pitched new crop wheat production for the US at 1.998 billion bushels, above trade expectations of 1.98 billion bushels and down from 2.052 the year before. Better yield expectations largely offset the lower area. US new crop exports were forecast to increase from this season by nearly 100 million bushels, which seems ambitious in light of plentiful supply from competing nations and there is no reason to think the price spreads that have hampered US exports this season will be dramatically different. World stock numbers were also negative, with global end stocks rising 15mmt to a record 257mmt, despite a 7mmt drop in production. A large part of the stock increase comes from China, which has gained 22mmt annually, representing an increase of 40mmt over the last 2 years due to domestic production increasing more rapidly than demand.
Matif ended little changed yesterday. New crop EU production was pitched at 156.50mmt, a decrease from this season’s record but only by 3.5mmt. Exports for this season were raised back up to 32.5mmt and the 16/17 estimate was even higher at 35mmt. The FSU crop was estimated down 2mmt with Russia up 2mmt at 63mmt and Ukraine down 3mmt at 24mmt. Russian exports were unchanged, giving a stock build of 2mmt.
UK market
London wheat closed slightly lower yesterday following an USDA report that did nothing to help wheat markets.
OSR market
The USDA report shocked markets last night as an increase in US old crop exports and crush demand put 15/16 ending stocks 25Mbu below trade guesses.
New crop numbers were even more shocking as the USDA added another 35Mbu to crush demand and a huge 145Mbu to exports. As a result, the 305Mbu end stocks were over 100Mbu below trade guesses, causing funds to start buying.
Overall, the soybean market appears to have made a turnaround due to demand. As the USDA did not raise China’s import projections and their pork production is hitting an all time high, there could be an increase in numbers to China in future months.
US wheat made small gains yesterday, finding some support from strength in corn and beans despite negative USDA data for wheat. The USDA pitched new crop wheat production for the US at 1.998 billion bushels, above trade expectations of 1.98 billion bushels and down from 2.052 the year before. Better yield expectations largely offset the lower area. US new crop exports were forecast to increase from this season by nearly 100 million bushels, which seems ambitious in light of plentiful supply from competing nations and there is no reason to think the price spreads that have hampered US exports this season will be dramatically different. World stock numbers were also negative, with global end stocks rising 15mmt to a record 257mmt, despite a 7mmt drop in production. A large part of the stock increase comes from China, which has gained 22mmt annually, representing an increase of 40mmt over the last 2 years due to domestic production increasing more rapidly than demand.
Matif ended little changed yesterday. New crop EU production was pitched at 156.50mmt, a decrease from this season’s record but only by 3.5mmt. Exports for this season were raised back up to 32.5mmt and the 16/17 estimate was even higher at 35mmt. The FSU crop was estimated down 2mmt with Russia up 2mmt at 63mmt and Ukraine down 3mmt at 24mmt. Russian exports were unchanged, giving a stock build of 2mmt.
UK market
London wheat closed slightly lower yesterday following an USDA report that did nothing to help wheat markets.
OSR market
The USDA report shocked markets last night as an increase in US old crop exports and crush demand put 15/16 ending stocks 25Mbu below trade guesses.
New crop numbers were even more shocking as the USDA added another 35Mbu to crush demand and a huge 145Mbu to exports. As a result, the 305Mbu end stocks were over 100Mbu below trade guesses, causing funds to start buying.
Overall, the soybean market appears to have made a turnaround due to demand. As the USDA did not raise China’s import projections and their pork production is hitting an all time high, there could be an increase in numbers to China in future months.