Last Friday night the USDA raised its forecast for the global wheat crop by 3.55 Mmt to 705.17 Mmt due to increases out of the EU of 1.7 MmT, the US of 1.4 MmT and Australia by 0.5 MmT (up to 26 MMT). Consequently global ending stocks were increased by 0.93 MmT to 189.54 MmT with the global stocks to use ratio increasing by 0.1% to 27.1% highlighting the global production – consumption equation starting to weigh more heavily on the production side.
This was similarly the case with soybeans as the USDA raised the global soybean production estimates up by nearly 5 MMT (4.79) to 304.79 Mmt on the back of increased production out of the US with global ending stocks up 2.43 Mmt to 85.31 Mmt and a global stocks to use ratio of 30.1% (up 0.6% from the USDA’s June estimate).
Corn was the exception of the 3 key grains with the USDA forecasting global production of corn to be down by 0.16 Mmt to 980.96 Mmt but with an increase to global ending stocks of 5.40 Mmt to 188.05 Mmt with an accompanying increase to the global stocks to use ratio of 19.5% (also up 0.6% from the USDA’s June estimate).
Much of the global changes were attributable to revisions in the US figures with the USDA forecasting an increase to US wheat production of 54.21 Mmt or 1.992 BBU (up 1.36 Mmt from June) with US ending stocks being estimated at 17.97 Mmt or 660 MBu (up 2.35 Mmt from June) and the US stocks to use ratio increasing quite markedly by 4.7% to 31.7%.
Again this was the case also with US beans with a 4.49 Mmt increase in production from the June estimate to and a record 103.42 Mmt (or 3.8 BBu) due to an increase to planting area with US ending stocks up 2.44 Mmt to 11.28 Mmt and the US stocks to use ratio for beans up by 2.3% from June to 11.7%.
Conversely, the US corn acreage was cut leading to a drop in US production of 1.91 Mmt from the June estimate (or 75 MBu) , though the US carryout or ending stocks is expected to increase by 1.91 Mmt to 45.76 Mmt with the US stocks to use ratio being increased by 0.6% to 13.5%. Interestingly the market was anticipating an increase to the USDA’s corn yield which may occur in the next monthly WASDE report.
The weekly USDA crop progress report came out last night and indicated that the overall rating for each of the 3 key crops came in a little better than last week and endorsed the bearish sentiment. The US winter wheat harvest is now 69% complete with the spring wheat crop conditions unchanged at 70% good-to-excellent with the corn’s crop conditions up 1% from last week at a 14 year high of 76% good-to-excellent, and beans unchanged from last week’s best rating in 20 years of 72% good-to-excellent.
The outlook for the US Midwest over the next 6-10 days should be favourable through the corn & soybean belt keeping downward pressure on pricing.