It was USDA World Ag Supply and Demand Estimates report night for their March stab in the dark. I’ll concentrate on wheat to start with. From a global perspective the report initially looks benign, if not a little bullish for wheat. Looking further into the data and blowing away some of the smoke and moving some of the mirrors tends to reveal a wheat report not as bullish as one might hope. Considering the consensus was for a much more bearish wheat report than what we have it’s probably a win though, kind of.
World ending stocks are lower by 610kt, now estimated at 258.83mt, not small. Carry in stocks were reduced 110kt but world production was increased by 960kt to a massive 786.7mt. Here’s where the smoke and mirrors start. China, the worlds best smoke and mirrors user, saw a reduction in both imports and ending stocks of 1mt. The rest of the world without China saw an increase of 390kt on ending stocks. The USA ending stocks projection was increased by 400kt after export projections were reduced.
Argentina saw production increased 400kt, that rolled through to higher (but still low) ending stocks there. Aussie numbers were higher, a 500kt increase in production to 26mt, was countered by a 500kt increase in exports. Leaving ending stocks at a tight 3.57mt, unchanged from the Feb estimate.
EU exports were left unchanged, maybe something to watch in the next report. Russia continues to be a thorn in the side for EU sales, reducing export volume recently. Russian production was increased to 91.5mt, pretty much the number the trade have been working on for months now. Russian exports were left unchanged at 51mt though, resulting in a 500kt increase in ending stock. That’s something we don’t need to see.
The net change in ending stocks from the major exporters was minimal, back from 40.9mt to 40.65mt, not bearish, but not really bullish either. Will this signal a floor in the wheat market, maybe. Volatility will most likely start to focus on N.Hemisphere production from here through to May / June.
Things to watch currently include the weather damage in India, dryness in the US HRWW belt, wet weather in France and dryness in N.Africa.