US markets traded lower once the USDA WASDE report hit the floor. After an early session rally grains suddenly shifted lower and closed the day out at the session lows.
The USDA report wasn’t bullish, it wasn’t bearish, it was bang on what the trade had expected it to be. So the market went back to simple fundamentals which are not very bullish anything at present. Corn struggled as the US looks down the barrel of a record crop. Wheat struggled as world stocks continue to be excessive, although back a smidge on the last report and soybeans also struggled on the back of big US yields.
Points of interest were an increase in Aussie wheat production from 27.5mt to 28.3mt. Canadian wheat production +1mt to 31.5mt. EU wheat back roughly 2mt to 143.22mt. Interesting to note N.African production is only back 90kt, thought maybe a bigger reduction was in order there. Russian wheat production is also a lot lower than I’d have thought at 72mt. Russia just this week has said they have 75.5mt of wheat harvested and are not quiet complete as yet.
So the actual data is not too much either way but it does leave the door open for next month’s data to be less than bullish if they increase Russian wheat production by 3 or 4 million tonnes. Not sure if Australia will grow the wheat they expect after recent frosts in the west but Canada is likely to come in a little higher anyway. 2016-17 will be all about quality boys and girls.