US futures initially rallied a little party due to the fact prices are already low and with the new USDA data showing stocks are now likely to be flat in the mid term there is probably no reason to push prices lower. The other factor being some level of disbelief in the USDA data.
Take for instance spring wheat, the USDA area used to calculate production hasn’t changed yet but we saw the spring wheat tour confirm abandonment rates in some areas as high as 50% with much of the western spring wheat belt averaging at least 20%.
Spring wheat futures did continue to collapse under the weight of both USDA data and physical deliveries though. With harvest pace picking up and good grain size and quality coming in across the eastern portion of the spring wheat belt a consumer might be forgiven for thinking that things may settle down and be rosy in the midterm. We’ll see what the Canadian data has to say about that at the end of the month. Overnight SovEcon released its own data on Russian grain production pegging all wheat production at 77.8mt, that’s even higher than the USDA number.
Glencore appear to be back in the mix to buy Bunge. Glencore talked of the possibility of diluting its stake holding in Glencore Agriculture, which is already 50% owned by Canadian pension funds, in order to fund the takeover. The attraction to Bunge is the level of US infrastructure it holds which would make capturing profit throughout the marketing chain easier for Glencore.