The USDA drank the Cool Aid supplied by ABARES, increasing Australian wheat production by 2.5mt.
To compound the bearish nature of the report on Aussie wheat the USDA also increased Australian beginning stocks by 950kt but did counter this a little by increasing domestic use by 500kt and increasing Aussie exports by 2mt to 25.5mt. I hope Asia likes ASW and feed wheat. The net result an increase in Aussie carry over of 950kt to 4.53mt, still fairly low by traditional levels.

The report can be viewed overall as bearish wheat prices. Increases in world opening stocks, production and ending stocks all creating some head wind for what has generally been pretty free sailing for wheat over the past month.  Increases in Russian, Canadian and Australian wheat production in this report will make it harder for prices to rally in the short term.
As much as I think this USDA’s stab at the Aussie number is as far out as what I think the ABARES number is, the market is the market. Unless we have the time up our sleeve to see these numbers corrected, if they are corrected (according to Jodi I’m often wrong), than prices may struggle to move higher through to mid-January.

US wheat futures responded as expected with losses in all three wheat futures contracts. US corn and soybean futures came out of the session relatively unscathed. The AUD is lower, Paris rape a tad higher and Winnipeg canola a tad lower.