Wheat

Surprise cut of global wheat ending stock

While the global wheat ending stock remain important, they have been revised down by 3.5MT to 209.6MT. This reduction is due to higher consumption especially in China, and the Middle East (Iran and Iraq) importing large quantities of Australian wheat over the last weeks.

Otherwise, the report has seen little changes. The US ending stock level has been reduced to 22.45MT due to higher exports. This change was expected by the market due to the high demand for American origin wheat because of its competitiveness.

In Europe, the report shows that a switch in consumption of 1.5MT of maize and barley from wheat has been made. However, this is not the case globally.

Conclusions and expectations for the opening of Chicago:

The surprise on the world wheat stocks could support wheat prices even though the trend of maize remains relatively stable.

Maize

A report without change

The global ending stocks have been reduced slightly due to increased consumption of maize, especially in Europe. The discount of maize compared to wheat in Europe has allowed this increase. Even with these few changes, the stock/use ratioglobally has decreased from 14.45% to 14.32%, a reminder of the low availability of maize.

It is important that there is no change in the balance, even though U.S. operators expected a decline in stocks.

Conclusions and expectations for the opening of Chicago

No big surprises expected, as the American balance has not changed. This may disappoint operators and weigh slightly on the day session. Beyond the USDAreport, Informa will publish its estimates for the U.S. Spring planting area. This publication from Informa may weigh on prices

Soybean

Sharp decline in production in South America affects world ending stocks

South America: As expected, South American 2011/2012 production was revised down. However we expected more significantdeclines. We estimate a total reduction of 6.4 MT in South America, as follows:

-3.5 MT to 68.5 MT in Brazil, -1.5 MT to 46.5 MT in Argentina, and -1.4 MT to 5MT in Paraguay.

USA: USDA has made little change in the balance sheet, staying at 34.7 MT exports for the 2011/12 campaign. The strong commercial activity to China has therefore not been taken into account for now. If this activity continues exports may be revised up in the next publication.

World: Coinciding with the sharp decline in soybean production in South America, we witness a reduction in world consumption (-3.15 MT) from Brazil, Argentina, China and Europe. The drop in consumption in China (-500KT for crushing) and in EU-27 (-400KT) is associated with a slowdown in imports compared to the February figures. Finally, the 2011/12 ending stocks were reduced by 3MT to 57.3 MT, equivalent to the consensus expectations (57.76 MT).

Conclusions and expectations for the opening in Chicago:

This report illustrates the global tension on the soybean balance sheet. But fornow, market participants may be disappointed by the low U.S. export figure maintained at only 34.7 MT. By this weekend, this could generate some profit taking and drive the market down at the opening of Chicago. For now rapeseed prices have risen by about 1 to 2 €/T on all expiries.