WHEAT

China’s recent multi-year revision of crop area, production, domestic usage and stock, adopted by USDA in its release on Thursday, placed an additional 150mln t of corn and 6mln t of wheat onto the global balance sheets.

However, this would only have a major impact on the market if China started exporting. USDA’s estimates of global figures excluding China showed little change on the month, despite the expected reductions in US corn and soybean yield projections.

The only major changes were a lowering of the Australian crop figure, which still looks too high, and reductions for Pakistan and Ukraine.

Exports projections were cut for Australia and Pakistan on those lower production figures, but left unchanged for the US, Russian and the EU.

With global usage (excluding China) reduced, closing stocks were reported 1mln t lower year on year versus last month’s report and down almost 15mln t year on year.

European markets are marginally firmer on the week, although market dynamics remain little changed.

The focus is on the slow pace of exports to non-EU destinations, which remain 26% down on the year, and the uncertainty of when Russia will slow or cease exports.

This was further confused this week by a release from Russia’s agriculture ministry reducing total grain export expectations to 35mln t, only to be followed by a confirmation stating total grain exports would hit 39mln t, including 35mln t of wheat. Either Russians can’t count, or they don’t know how much grain they have.

UK markets are down on the week as prices react mainly to a firmer sterling/euro exchange, as optimism increased on a potential Brexit agreement being reached.

Spot delivery prices continue to ease as merchants square off physical supplies, although selling pressure seems to be waning with very little being offered in the December position.

David Sheppard, Gleadell’s managing director,commented:

"Taking China out of the USDA numbers shows global stocks-to-use ratios for corn and wheat at only 11.7% and 19.8% respectively.

"With concerns remaining over final southern hemisphere wheat production, slow planting progress of US winter wheat, and less-than-ideal weather conditions seen across most of the EU and parts of the Black Sea as crops move towards dormancy, there is enough to keep market bulls interested.

However, the slow pace of US and EU wheat exports will keep bears reminding the trade there is no current shortage, leaving markets to drift lower on sentiment, unless a major change to current market dynamics occurs.

OSR market

USDA released its latest production and supply and demand estimates last night. A sharp cut in US soybean output was the main headline, reducing production by 2.5mln t. However, this offset by an equally sharp cut in the export forecast, due the ongoing trade issues between the US and China.

Globally, USDA reduced soybean production by 2mln t, but predict a slowdown in demand, leading to a further rebuilding of world stocks.