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USDA WASDE Report – Special Market Strategy Update, 14 September 2018

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USDA WASDE Report – Special Market Strategy Update

The USDA WASDE report is out and as with last month, provided some fairly US-centric views of expected changes to global trade in 18/19.  The vast majority of the changes to the global balance sheet were reflected in the US with general increased production potential.  A few surprises out of the FSU region has the market scratching its head.  Overall the report on the surface is slightly bearish given the numbers, however, the view of many in the market is the underlying tension on export demand continues for cereals.  Oilseeds continue to be mired by the trade tensions between the US and China providing little clarity in price direction.

On the domestic front the trade are working on the task of feeding eastern Australia for the coming season.  With significant supply deficiencies in eastern Australia, the logistic task of moving grain west to east, south to north continues by road, rail and ships.  There is also talk of the eventual importation of feed from overseas with expectations of Canadian wheat and US corn being sourced to feed domestic capital city markets.  As noted in the last message to growers there is to some degree a tendency at the moment to dismiss the current global situation, as for much of Australian production, the focus is purely on the deteriorating domestic situation.  While this is the main price driver locally at present we need to be slightly cautious on how buoyant we get on price support coming into harvest and the new year.  Domestically, much depends on the spring weather (not looking great so far) and any potential for upside in production or further deterioration of the crop.  At some point either domestic prices will get high enough to promote importing feed (import parity) or global values sink lower enough to do the same.  Either way this market is close to import parity levels and general consensus is, when the domestic supply is sorted out one way or another by the consumer, prices will come back.  In the past we have seen prices come down swiftly at this point.


The outline of monthly changes by the USDA in the September report for major wheat importing and exporting nations is shown in the chart below.  Given the recent well-publicised production issues in major production regions of the world, the increase by the USDA in world production by 3.37Mmt has a few scratching their heads.  Production estimates for the 18/19 season was lifted in India (up 2.7Mmt), Kazakhstan (up 500Kmt) and Russia (up 3Mmt).  Production estimates were decreased for Australia (down 2Mmt to 20Mmt – still likely around 2Mmt too high with ABARE alone at 19.1Mmt) and Canada (down 1Mmt).  There has also been a change in imports by Indonesia indicated for this season, dropping 1Mmt to 10.5Mmt.  Exports from Australia were dropped by 2Mmt to 14Mmt – still well over current trade estimates of 11.5-12Mmt, Canadian exports were lowered 500Kmt.

The USDA has made some interesting changes to domestic consumption which contributes to the seemly bearish numbers from the report.  Australia domestic consumption was reduced by 500Mmt, to 7.6Mmt (around 1Mmt lower than current trade estimates).  Domestic consumption was also lower in other significant regions; Canada down 400Mmt and Indonesia down 400Mmt.  Conversely, domestic consumption was also increased in significant regions; the European Union (up 1Mmt) and Russia up 2.5Mmt. As a result of the changes, and quite perversely in some instances, ending stocks were increased in Australia (up 1Mmt), India (up 2.3Mmt), Kazakhstan (up 300Mmt) and Russia (up 2.05Mmt).

So, overall despite USDA reporting, world production will decline 25.2Mmt year on year, domestic consumption increasing 4.6Mmt year on year and ending stock declining 13Mmt year on year, the world stocks to use ratio remains comfortably at 35.13%, up 21 points on last month’s report.

Over the last few reports, we have been talking about where global wheat stocks are located with the emphasis being on the vast majority of world wheat stocks being held in China.  This effectively means the majority of world wheat stocks are not available for export.  The chart below shows the impact of the stock’s position of major importers and exporters as a result of the latest USDA WASDE numbers.  We can see the balance sheet has loosened up a little and on the surface contributes to the bearish theme of the latest report.  There are a few factors that need to be considered in focusing on the potential price drivers in this scenario.  As we have been hearing and reading there is a very good chance that Russia will restrict wheat exports at some stage this year or very early in 2019.  Russian export pace has been phenomenal with exporters rushing to make sales and execute before any government intervention.  Current estimates cap Russian exports for the season at 35Mmt (USDA), a 6.4Mmt year on year decline.  IGC are currently forecasting 30.7Mmt.  Once Russian exports are exhausted, demand will shift to the US providing expectations of price support.

As we have seen with the US/China trade dispute, any major government intervention in world trade flows can have a significant impact on global prices.  Currently, the USDA report has likely dampened the market in the short term – on the back of expectations of increased global stocks in major exporting regions.  We do however believe longer-term fundamentals will prevail with a shift in export demand to the US and resulting price support into the new year.


The world barley balance sheet continues to be historically tight, supported also by an overall historically tight coarse grains balance sheet. As with wheat, the latest USDA report lifted production estimates in the Black Seas region which, in the case of barley has offset some of the declines seen in EU and Australia.  While USDA reduced Australian barley production by 1Mmt to 7.8Mmt, this is still around 1Mmt over current trade estimates.  Australian exports are predicted to be around 5.8Mmt, again higher than current trade estimates of around 3.6Mmt.

We are also seeing the tight global supply and resulting global price situation in barley rationing demand.  A shift that is seeing a resulting lift on global corn consumption and provided a slight lift in the world stock-to-use for barley in the latest report.

Significant observations from the USDA report for corn show production in the US and EU was lifted 6.1Mmt and 1Mmt respectively.  European imports were lifted 1.5Mmt and US exports were lifted 1.27Mmt.  Domestic consumption was also lifted 3.5Mmt in EU, a 6Mmt jump year-on-year.  Similarly, US domestic consumption was lifted 1.9Mmt, a 4.95Mmt lift year-on-year.

Overall global coarse grain stocks continue to be tight with ongoing price support expected for barley in 18/19.  Our domestic market will continue to be supported by internal requirements.


The soybean balance sheet continues to remain loose with the USDA report seeing little month-on-month change from a global perspective.  Year-on-year changes continue to pressure soybean prices with world production up 32.5Mmt and ending stocks expected to increase to by 13.5Mmt.   US production was lifted 2.9Mmt from the last report (with ending stocks up 1.6Mmt) and China’s imports reduced a further 1Mmt the soybean market remains under pressure.  Overall the world total oilseed balance sheet remains weighty.

The canola balance sheet shows a little of the opposite.  World canola production was reduced 450Kmt month-on-month for major importers and exporters in the latest report, but this has been offset by the 825Kmt decline in domestic consumption expected in the major importing and exporting regions.  Surprisingly, USDA left Australian Canola production unchanged at 3.2Mmt, or close to 1Mmt over current trade estimates and exports at a heady 2.6Mmt.  Overall expected world production of canola in 18/19 has declined with the stocks-to-use falling 41 points to 8.4%.

Canola will remain challenged by the headwinds of the heady global overall oilseed balance sheet and the continued consternations of the US/China trade tiff.  The tightening global canola balance sheet combined with the challenging production season domestically would be expected to continue to provide some underlying price support for canola into the 18/19 season.

USDA WASDE Summary 12/12/16

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The latest USDA Report for December was released on Friday, and globally the USDA Report was overwhelmingly bearish across all commodities. However, the US ending stocks of the key commodities were kept unchanged despite expectations that they might have increased, which combined with fund buying led to a jump in most futures. Globally, wheat jumped a solid 6.5 million mt of which 4.7 million mt was in Australia at 33 million mt. Corn production was up in several countries but lower than expected US stocks supported prices overnight. Beans were also up solidly on the production side but it was almost matched by a similar increase in demand.  Overall, the report was more of the same with big crops so the market will likely digest it pretty quickly.


  • World production UP 5 million mt – key changes:
    • Australia UP 7 million mt to 33 million mt.
    • China UP 85 million mt.
    • EU UP 4 million mt.
    • Brazil UP 36 million mt.
  • Consumption UP 2 million mt (mainly in Australia, Russia and China).
  • Stock levels UP 9 million mt and stocks to use ratio UP 24 points to 34.08%.


  • World production UP 7 million mt – most in Australia and Canada.
  • World demand UP 3 million mt.
  • World stocks UP 28 million mt with stocks to use ratio UP 16 points to 15.85%.

CORN              BEARISH

  • World production UP 2 million mt – with key changes:
    • China UP 55 million mt.
    • Brazil UP 3 million mt.
    • Russia UP 1 million mt.
    • Canada UP 7 million mt.
    • Indonesia UP 6 million mt.
    • EU UP42 million mt.
  • World demand UP 7 million mt – mainly in the China and Indonesia.
  • World stocks UP 4 million mt – mainly in China and Brazil.
  • World stocks-to-use ratio UP by a 30 points to 21.65%.


  • World production UP 9 million mt – most of it in India and Canada.
  • World demand UP 9 million mt.
  • World stocks UP by a massive 1.3 million mt (in Argentina and India).
  • World stocks-to-use ratio UP 27 points to 28.85%.

USDA Summary – October

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USDA report mainly bullish grains and bearish oilseeds. Wheat saw another month of support with less production, more consumption and less stocks, whilst the USDA lifted the Australian wheat production by 0.8 million MT from last month (we believe they are 2 million MT on the high side for AUS).  Barley continue to get tighter every month in these reports, and this month was no exception with production down, consumption up and stocks down.  Globally corn saw lower production in the US and a better Brazilian crop could not help that. Stocks of corn are down 2.6 million MT this month. Beans were the most bearish with record US yields and higher global production by 2.8 million MT. Ending stocks jumped 5.1 million MT.

WHEAT             BULLISH

  • World production DOWN 4 million mt.
  • Biggest changes
    • Australia unexpectedly UP8 million mt. This should definitely change once harvest gets going.
    • Canada UP 1 million mt.
    • EU DOWN 2 million mt.
    • US DOWN 3 million mt.
  • Consumption UP Close to 1 million MT (US consumption down close to 2 million MT)
  • Stock levels DOWN 7 million MT and stocks to use ratio down 5 point to 33.76%

BARLEY             BULLISH

  • World production DOWN close to 1 million MT (mainly in Russia and EU)
  • World demand UP close to 0.5 million MT
  • World stocks DOWN 5 million MT with stocks to use ratio down a solid 32 points to 15.61%

CORN                BULLISH

  • World production DOWN close to 1 million MT (mainly EU and US whilst Brazil actually up 1 million MT)
  • US yields now forecast at 173.4 bu/acre
  • World demand DOWN 5 million MT – mainly in the EU and “Other” countries
  • World stocks DOWN 6 million MT
  • World stocks-to-use ratio DOWN 31 points to 21.28% (and US ending stocks projected to be down as well)


  • World production UP 8 million MT – (US up 1.8 million MT and Brazil up 1 million MT)
  • US yields up to 51.4 bu/acre
  • World demand DOWN 5 million MT
  • World stocks UP by a massive 5.1 million MT (in Argentina, Brazil and China)
  • World stocks-to-use ratio UP 185 points to 27.06%

September USDA Summary

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The USDA report was mostly bearish with a few surprises. Wheat took a good chunk out of ending stocks again by reducing EU, India and China down solidly (and Australia up).  USDA left US wheat ending stocks unchanged. Corn saw global production and ending stocks down, and in particular we saw US corn yields down from the August estimate which took a good chunk out of US production – most of it expected though so market did not react much. Beans saw the biggest surprise with US yields up well more than most traders expected – and a resulting 3.8 MMt increase in US production.

WHEAT             BULLISH – CBOT SRW DEC UP 5.80 USc/bu

  • World production for 16/17 UP 4MMt. EU (2.2MMt) & China (2MMt) both DOWN. Kazak (1.5MMt), Russia (7MMt) Aus (1MMt) India (2MMt) all UP.
  • World consumption UP 1MMt (Mostly India & Morocco.)
  • World stocks-to-use ratio DOWN again to 33.81%. (Fourth downward revision in a row).

BARLEY             BULLISH

  • World production DOWN 5MMt (Mainly EU & Russia).
  • World demand UP 13MMt.
  • World stocks DOWN25MMt.
  • World stocks-to-use ratio DOWN 19 points to 15.92%

CORN              NEUTRAL to BULLISH – CBOT Corn DEC DOWN 1.60 USc/bu.

  • World production DOWN 7MMt (Mostly China, U.S & EU)
  • World demand DOWN5MMt (Mostly U.S & EU).
  • World stocks DOWN4MMT.
  • World stocks-to-use ratio DOWN 12 points to 21.59%.

SOYBEANS        BEARISH – CBOT Soybeans NOV DOWN 16 USc/bu.

  • World production UP12MMt (Majority US which is UP 3.8MMt).
  • World demand DOWN1MMt.
  • World stocks UP9MMt.
  • Stocks-to-use ratio UP 42 points to 25.20%.

August USDA WASDE Report Summary

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The USDA report was overly bearish with a few surprises although not enough to significantly shift markets. Most changes were U.S. based and were the main driver for increases to global stocks-to-use ratios. With no significant threats forecasted Southern & Northern Hemisphere crops we pretty well know we will need a large and dramatic shift in demand or a major problem to occur within the row crops to break out of these low prices.

WHEAT            Bearish – CBOT SRW SEPT Down 1.50 USc/bu

  • World production for 16/17 UP up 5MMT. EU DOWN 9MMT, Ukraine/Kazakhstan UP 2MMT ea, Russia UP 7MMT, Australia/Canada UP 1MMT ea.
  • World consumption UP 3MMT ( Mostly Russia & U.S.)
  • World stocks-to-use ratio down again to 34.52%. (Third downward revision in a row).

BARLEY           Bearish

  • World production UP 1MMT (Mostly Australia, Russia & Canada).
  • World demand UP 25MMT.
  • World stocks UP7MMT.
  • World stocks-to-use ratio UP 44 points to 16.11%

CORN                Bearish – CBOT Corn SEPT UP 1.50 USc/bu.

  • World production UP 17MMT (Majority U.S.).
  • World demand UP7MMT (Mostly U.S.).
  • World stocks UP4MMT.
  • World stocks-to-use ratio UP 107 points to 21.71%.

SOYBEANS       Neutral to Bearish – CBOT Soybeans SEPT DOWN 0.25 USc/bu.

  • World production UP4MMT (Majority US).
  • World demand UP5MMT.
  • World stocks UP
  • Stocks-to-use ratio UP 140 points to 24.78%.


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Not a report full of surprises on Friday night, more just in line with expectations. Wheat saw big increases in production, but nothing that we didn’t know beforehand. HRW wheat also got a boost of production. Beans and Corn ending stocks cut in the US, but as global figures were cut less than expected, no real change there.

Wheat            Neutral to Bearish – CBOT SRW JUL Down 15c

  • World production for 16/17 up nearly 4 million mt, comprising mostly of the US, EU and Russia.
  • World consumption up 3.4mmt, mainly India, the EU and the US.
  • World stocks to use ratio down slightly to 36%

Barley                        Neutral to Bearish

  • World production up 3.1 million mt, mostly EU and Ukraine
  • World demand up 2.7mmt, mostly EU, Saudi Arabia and Iran
  • World stocks up .6mmt
  • World stocks to use ratio up slightly to 16.41%

Corn               Neutral to Bearish – CBOT Corn JUL Down 3c

  • World production up 0.7 million mt – All Mexico
  • US ending stocks below traders estimates
  • World demand up 1.2mmt – mostly US
  • World stocks down 2 million mt
  • World stocks-to-use ratio down to 20.25%

Soybeans        Neutral to Bullish – CBOT Soybeans JUL Up 1c

  • World production down 0.5mmt
  • World demand up 0.6mmt
  • World stocks down 2mmt
  • Stocks to use ratio down a considerable 72 points to 23.12%

Nic Sewell

USDA raises global production again

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Wheat rallied last week posting solid gains from start the week. Heavy deliveries and a strong dollar pressured while technical buying helped wheat recover losses from last week. CBOT Wheat March 16 futures rallied 4% and finished the week 495.40 USc/bu. Up 16.8 USc/bu week on week.

The US winter wheat conditions have remained steady at 55% good to excellent following recent moisture events, and this should allow for the winter wheat to move into dormancy in very good shape.

The USDA Supply and Demand Estimates report released on Thursday saw minimal changes to the US wheat balance sheet. However Global wheat stocks forecasts were raised higher by 2.3 million tons. World wheat production remains at a record high and is raised 1.9 million tonnes to 734.9 million. The upward revision from the November report follows increased production estimates for Canada up 1.6 million tonnes to 27.6 million and the EU.

The USDA reports Australian wheat production will still be at 26 million tonnes, while ABARES recently reduced our production by 1.3 million to 23.96 million tonnes. ABARE also reduced their estimate of Australia’s 2015/16 wheat exports to 16.95 million tonnes from 17.53 million tonnes. (16.6 million In 2014/15).

Brazil’s wheat crop has been lowered again to 5.2 million tonnes down from the 6.2 million tonnes last month. Increasing the potential for wheat imports from the US during 2016.

India’s wheat crop plantings are raising concern with only 200,000 hectares planted vs 242,000 last year, as high temperatures delay plantings, however India still have ample stocks to cover any short/medium term requirements.

USDA Report

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USDA Report

15th September 2015


The USDA report released on Friday 11th September (US time) had some bearish news for wheat with both global ending stocks and global wheat production up by 5 million metric tonnes (mt). Canada, Argentina and India all had decreased wheat supplies however this was not enough to counter supply increases from Europe, Russia and the Black Sea.

Global wheat consumption was the shining light, up by 1.6 million mt due in part to increased feed use from Russia, the EU and the Philippines.


A bullish outlook for corn unfolded on the back of a global production cut of 7 million mt and ending stocks down 5.4 million mt.

US Corn yields down by 20% compared to last year.

Chinese corn production down by 3 million mt to 229 million mt.


Global bean stocks were down by around 2 million mt from last month’s report, the estimate now stands at 527 million mt.

Canadian canola producers are battling cold and wet start to their harvest, the weather interrupted start has the potential to effect production and/or quality in the area.

MONDAY 14th September;

CBOT Wheat Dec 15 – 485c/bu (+7)

CBOT Corn Dec 15 – 387c/bu (+12.8)

CBOT Beans Nov 15 – 872.4c/bu (+.2)

ICE Canola Nov 15 – $469.8 Canadian (+2.9)

Australian dollar against US Dollar- $0.7101

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