The October USDA World Ag Supply and Demand Estimate (WASDE) report was out last night. I’ll concentrate on wheat, month on month the report shows an increase in carry in of 930kt, that’s quite a lot, and went some of the ways to countering the decrease of 2.8mt in the 2024/25 production estimate. Usage was also reduced which when combined with the increase in carry in did counter the reduced production estimate resulting in an increase in ending stocks of 500kt up to 257.72mt.
The crux of it all is we see the stocks to use ratio increasing from 31.96% last month to 32.11% in October. To get a sustained, fundamental rally in wheat we really need to see the S:U ratio fall below 30%. Charts attached.
Drilling down into the wheat data we see that the US opening stocks, production and ending stocks were all reduced. This should see continued support for US futures, but with increases in international S:U we may see that reflected as continued weaker basis to Chicago futures in some locations.
Probably one of the more disturbing increases was in the major exporters stocks. Major exporter carry in stock increased 1.5mt, and ending stocks increased by 900kt. There was a 1.4mt decrease in major exporters production which greatly assisted the final number.
Argentine numbers were left unchanged, both production at 18mt and exports at 11.5mt , are a little questionable. Brazilian production was reduced 500kt, while 500kt was added to their imports, Brazilian carry in was increased by 120kt, this went straight onto ending stocks.
Russian production was reduced 1mt to 82mt, carry in was increased 1.5mt to counter this and add a little to ending stock. Russian exports were left unchanged at 48mt, potentially a little on the low side. Canadian numbers were unchanged.
Australian wheat numbers were also left unchanged, production estimated at 32mt, a number many private analyst now think is very unlikely. Domestic forecasters are generally between 1.5mt and 2.5mt lower than 32mt. EU production was back 1mt but exports were back 1.5mt, increasing carry out by 500kt.