The USDA put out their September World Ag Supply and Demand report last night. It was generally what the market was expecting for wheat but the punters were expecting to see a little more bullish news on soybeans and corn. Markets responded accordingly, wheat trading higher at Chicago and Minneapolis. Chicago soybeans were hit hard, the fall reflected in both Paris rapeseed and Winnipeg canola. Corn futures at Chicago were lower, pushed lower by better than expected USDA data but interestingly choosing to overlook increased demand news from China and the USA not in the report.

Looking more closely at the WASDE for wheat, we see world ending stocks projected 7mt lower, from 265.61mt to 258.61mt. Although lower it still represents a stocks to use ratio above 32%. This will continue to be an anchor on the physical market going forward. World opening stocks were lower but the main adjustment came from lower world production, back 6.03mt. The USDA numbers for Argentina, Australia & Canada are now much closer to industry estimates. Australia is pegged at 26mt, although 3mt lower than the August estimate it is still almost 800kt higher than the latest estimate from Riverina Australia. Argentine wheat production was reduced 1mt to 16.5mt. We are just starting to see private estimates for Argie wheat coming in lower than this. Dry weather there is starting to hurt as the weather warms up, as it is here, and the crop moves into grain fill. Canadian wheat production was reduced 2mt to 31mt, not a small crop, but the reduction did push prime wheat cash and futures values higher in overnight trade. The spread between 13% wheat and 11% wheat in Canada is roughly C$26.
Private estimates for the Russian wheat crop have been getting bigger but the USDA kept the Russian crop at 85mt. The USDA increases the Ukraine wheat crop by 1.5mt, at this stage I guess that line is a little blurry. As far as wheat goes, the USDA report wasn’t bearish, which is a good start.