Farming News - USDA report trims 2021/22 global wheat production below trade expectations
USDA report trims 2021/22 global wheat production below trade expectations
Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market
The aggressive stance adopted by USDA in its latest report, which trimmed 2021/22 global wheat production below trade expectations, has pushed US and European markets higher, the latter to contract highs.
UK Nov 21 feed wheat futures had gained £9.55/t on Wednesday’s close by Friday lunchtime, with May 22 up £10/t.
USDA reduced US all-wheat crop output by 1.3mln t and slashed Canadian and Russian wheat projections, cutting global production by 15.5mln t. With lower usage numbers, global stocks were reduced 4.5% to 279mln t.
Although EU wheat numbers were increased, over the next few months USDA will have to address the current quality issue Europe has, especially in France, and the ramifications for the level of EU exports.
Global corn (maize) production was forecast down by 8.7mln t but, with a slight fall projected in usage, global stocks were reduced by 2.2% to 285mln t. US corn was cut by 10.5mln t and carry-out stocks by 4.8mln t due to reduced domestic usage and exports.
The report’s 6mln t reduction for Brazilian corn output was more than offset by lower feed and domestic usage, increasing 2020/21 carry-out stocks.
Scorching heat continues to hit large swathes of western Canada’s grain area amid a lack of moisture. Rain in the east is too late to save the crop and is delaying harvest.
Wheat yields in Russia remain below last year’s levels, averaging 3.36t/ha across 16.1mln ha, compared with 3.67t/ha over a slightly smaller area a year ago.
However, UkrAgroConsult has increased Ukraine’s 2021 wheat crop by 1mln t to 30.5mln t, reflecting government planting data.
Wheat quality in France is suffering after heavy rain. One major player reports that only 35% of the crop harvested so far has a specific weight above 76kg/hl (export quality).
Harvest is progressing slowly in Germany, with farm co-op DBS projecting that the 2021 wheat crop may be slightly above 21mln t, down 2mln t from its previous estimate.
The UK wheat harvest remains slow, keeping supplies low and prices high in certain parts of the country. Harvest activity should increase over the next few days, removing spot premiums.
Initial views place crop quality slightly lower than a year ago, with much regional variance. Given current price levels, we would still advise growers to adopt a little and often strategy.
Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market
Yesterday was all about the USDA report, with the market taking a risk-off approach ahead of its release. The report itself was more bullish for wheat/corn, with beans being the weak link. Beans rallied over 27 cents after the report, following wheat and corn higher, but couldn’t hold on to those gains later in the session.
US weather has turned cooler in the western corn belt and plains, with rain in the forecast for next week.
Brazilian soybean production remains at 137mln t, whilst Argentinian production fell to 46mln t.
China is back in the market purchasing US soybeans for the first time since the end of June. There were also reports that Chinese officials will also sell some commodities from state reserves due to the country’s recent floods and spike In covid cases.
China’s pig herd is estimated to remain at 43 mln head from 2021 – 2025. Margins are improving which lends support to beans and meal.
Malaysian palm oil dipped pre-report after touching contract highs earlier in the week on lower stocks.
In Canada the weather remains warm. USDA reduced rapeseed production by 3mln t to 16mln t, which is still above expectations. However, lower export figures offset that fall, which pressured prices.
Matif rapeseed traded higher this week, following the US market. Prices are now trading at contract highs.