MarketsFarm — Parts of the U.S. Department of Agriculture’s latest world agriculture supply and demand estimates (WASDE) have “caught the trade off guard,” according to one trader.
In its report, released Thursday, USDA significantly cut production volumes in Canada, Australia, Russia and Ukraine. In total, global wheat production was down 9.4 million tonnes, and stocks were down by nearly eight million tonnes.
“Traders were so focused on corn and beans, they may have overlooked the USDA slashing [wheat] production in several countries,” explained Terry Reilly, a grains analyst with Futures International.
In total, the WASDE predicted 771.5 million tonnes of wheat will be produced around the world. World ending stocks were projected as down to approximately 286.5 million tonnes.
Old-crop soybean crush volumes were reduced by 15 million bushels, indicating that the 2018 soybean crop was larger than USDA initially reported.
“I think that’s warranted,” said Reilly.
Prices on the Chicago Board of Trade didn’t react drastically to the report, mainly due to the fact that market participant expect planted and harvested areas to change in the next WASDE report, due out Aug. 12.
“This month is completely speculative,” said Reilly. “Next month is all survey-based, so they’ll know a little bit more.”
USDA pegged U.S. soybean production at 3.85 billion bushels, which is 38 million bushels lower than originally expected.
Expected corn production is around 13.875 billion bushels, 195 million bushels above the June estimate.
— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.