Wheat and corn futures at Chicago were mixed but generally trended lower after the release of the USDA World Ag Supply and Demand Estimates report released last night. Soybeans failed to hold onto early gains, closing the session flat.
A quick look at the wheat table in the WASDE will work as a better sedative than a meeting with an account. The big number, world wheat production, was increased 5.14mt to 788.94mt. If you blow the smoke away and tilt the mirror right you can see that opening stocks were reduced 5.25mt, the bulk of that opening stocks adjustment, 5mt, is in China. The Chinese number just rolls through to lower ending stocks with no adjustments to any other number in their table. No adjustments to usage, imports, exports, nothing……….. nothing to see here, move along.,,, because China.
Other surprising adjustments include an increase to Argentine wheat production, didn’t see that coming, 12.5mt in Feb to 12.9mt in March. Argentine data continues to look sus as the USDA also decreased exports by 1mt but failed to increase domestic consumption, because you know, domestic consumption never increases when there’s a raging drought does it. So, Argie ending stocks were 1.3mt higher.
As expected, Aussie wheat production was increased 1mt to 39mt, still getting my head around the size of that WA crop. Sand + Rain = Wheat. Aussie exports were increased 500kt, so the additional production just rolled through to 500kt higher ending stocks. The Aussie wheat stocks number isn’t burdensome by any means though and remains below 6mt and probably mostly of that in the west. This would allow east coast values to spike quickly if dry weather was to persist……. which the weather appears to be doing.
Prior to the release of the report there was speculation around increasing Russian production too, but wheat production, consumption and exports were all unchanged in this report. Indian exports were decreased, domestic consumption countering the increase in production, ending stocks there unchanged.