It’s USDA World Ag Supply and Demand Estimates reports time. So I’ll obviously spend the next hour or two pawing through the data, comparing different analyst views in an attempt to predict the future, only to disagree with different aspects of the report, thus rendering it useless in one or two days time, oh the joy, so lets dive in.
Focusing on world wheat, we see that the USDA did not do what the majority of the trade thought they would do, in fact they basically done the opposite. Increasing both opening stocks and ending stocks. Beginning stocks were increased 2.89mt. This was countered somewhat by the prediction for smaller world production, back 1.4mt due to reductions in the EU of 4mt, this somewhat countered by increases in Australia, up 2mt to 32mt and Ukraine, up 700kt to 22.3mt, the later somewhat of a surprise given recent media reports. The Australian increase, not so much of a surprise. The question is, is the reduction in EU production actually enough. A fall of 4mt taking production down to 124mt does bring the number much closer to some private estimates, but time will tell. The thorn in the side for this report is the 600kt increase in ending stocks. Most of the punters had expected to see a slight decrease, potentially forgetting the age of this data. So what are some of the things I see that may not be as accurate as I’d expected. Argentina is still in at 18mt, unchanged from last month, this has potential downside given the recent lack of rain there. Brazil is still in at 9.5mt, considering the rain there during sowing I’m still struggling to see this as a reliable number too. Russian exports were left unchanged at 48mt, their current export pace is strong though. Canadian exports were increased 1mt but so was their opening stocks, up 2.75mt from last month, that’s a lot, 1.83mt vs 4.58mt. Canadian domestic demand was increased by 800kt and exports 1mt, to help counter the delay in old crop exports….. I guess. Aussie exports were increased 2mt to 25mt, this will could go higher given the current pricing of Aussie wheat. Kazakhstan production was left unchanged at 16mt and their beginning stocks were increased 500k, this number rolling right through to an increase of 500kt to their ending stocks, smoke and mirrors baby, smoke and mirrors.