USDA Report: Summary For Wheat
Production
The USDA raised it's all wheat production estimate for the US to 57.5 MMT, in line with other analysts estimates. They lowered production in Argentina by 1.5 MMT to 9.5MMT, which is probably nowhere near enough, lopped 1.5 MMT off Canadian output and 1.3 MMT off the EU-27. Production estimates were raised in Russia by 1 MMT to 60 MMT despite other analysts like SovEcon lowering their estimates earlier in the week. Ukraine and Kazakhstan saw increase of half a million each.
Consumption
There were only minor tweaks on the consumption front, half a million down in Canada being the most significant, global consumption was raised by around three quarters of a million tonnes.
Stocks
Ending stocks were lowered in Canada by 1.2 MMT and the EU-27 (by 2.7 MMT) to 14.7 MMT. That is 3.2 MMT lower than EU-27 average for the last ten years, so much for the "we are awash with wheat" brigade. Ending stocks were raised by 1.6 MMT in the US, with only very minor tweaks elsewhere.
Exports
Argentine exports for the year ahead were reduced from 4 MMT last month to 2.5 MMT, Canadian export were dropped half a million. Increases are forecast for Kazakhstan and Russia (half a million each), and a million for Ukraine, plus half a million for the US.
Imports
Only relatively minor adjustments, amounting to an increase of 600,000 MT globally.
CBOT Closing Comments
Soybeans
July beans closed at $11.28 ¼, up 17 ¾ cents, November at $9.17, up 1 cent. The market clearly does not think that the USDA ending stocks are correct for old-crop, and neither do I. They are clearly guilty of trying to avoid panicking the market by coming out with a figure of 100 million bushels or less. Stocks will be incredibly tight this year, they just don't want to admit it. Having said that, I am not bullish at all on new crop. We are likely to see three record high crops in a row. The US in Sep/Oct, Brazil in Feb/Apr and Argentina in Apr/Jun.
Corn
July corn closed at $3.45 ½, up 2 cents, whilst December corn was at $3.38, down 2 cents. US weather forecasts are very promising for US corn development over the next few weeks, and after that the crop is pretty much made. Global ending stocks for Argentina increased from last year by .13 MMT, for China by 4.05 MMT and decreased by .4 MMT for South Africa and 1.5 MMT for Brazil. Today’s CFTC report showed continued liquidation of net long positions in the corn by the Large Specs and continued addition of net longs by the index funds.
Wheat
July CBOT wheat closed at $4.91 ¾, down 2 ½ cents. The USDA numbers were a bit bearish, US all wheat production was pretty spot on with the average trade guess at 2.112 billion bushels, compared to expectations of 2.107 billion. incidentally, 2.112 billion bushels is around 57.5 MMT. World wheat production estimates were cut in Canada, Argentina and the EU-27. They haven't cut Argy production anything like enough though at 9.5 MMT, that's over 50% more than the Buenos Aires Grain Exchange are now saying.
EU Wheat Follows America Lower
EU wheat followed the US lead, closing lower with Paris November milling wheat down EUR0.25 or at EUR143/tonne, and London November feed wheat closing GBP1.25 lower at GBP112/tonne.
Today's USDA report was a little negative for US commodities, but they did reduce Canadian, Argentine and EU wheat production estimates from last month.
Farmers remain reluctant sellers at current levels, yet the trade seems surprised by this.
Egypt appear to have finally sorteed out their problems with Russia over quality issues, whish may be negative for Eu and US wheat demand when they are next in the market to tender.
The harvest is upon us in Russia and Ukraine, but early yield reports are questionable.
eCBOT Close, Early Call, Report Reaction
The overnights closed mixed, with beans mostly around 3-7 cents lower, wheat mainly 3-4 easier and corn a half to 2 cents higher.
It was a quiet eCBOT market, with just a little light book-squaring ahead of the USDA report.
Overall, I'd say the report is a little bearish, but largely in line with expectations.
For US ending stocks there was no stand-out shock, predictably they couldn't bring themselves to come out with an old-crop soybean number any less than last month's 110 million bushels, although in reality things are probably quite a bit tighter than that.
For new-crop stocks they raised beans above the average guess, but not hugely, and probably not enough. Maybe they know that their old crop number is too high, so they are compensating for that because they suspect that the carry-in from this season will in fact be lower than the figure they are using?
All wheat production was pretty spot on with the average trade guess at 2.112 billion bushels, compared to expectations of 2.107 billion. incidentally, 2.112 billion bushels is around 57.25 MMT.
World wheat production estimates were cut in Canada, Argentina and the EU-27. Astonishingly the USDA number is within 150,000 of my own Nogger estimate! They haven't cut Argy production anything like enough though at 9.5 MMT, that's over 50% more than the Buenos Aires Grain Exchange are now saying. Sort it out Tibbs.
There you go it's history already.
Of more import today might be crude oil going down the toilet, at $58.96/barrel, that's the lowest since May, and around $15 off the mid-June highs, and the largest weekly fall since January.
US weather outlook remains promising, at least for developing crops, not so great for advancement of the winter wheat harvest.
South Korea purchased 110,000 tonnes of corn overnight. Tunisia has bought 92,000 tonnes of optional origin wheat. Egypt says it has agreed inspection criteria with Russia on future wheat shipments.
Early calls for this afternoon's CBOT session: corn called 5 to 10 lower; new crop soybeans called 5 to 8 lower; wheat called 4 to 6 lower.
USDA World Crop Production Numbers
In addition to US stocks data the USDA have also been consulting with clairvoyants for a stab at some fresh global crop production numbers, here's what they've come up with in MMT:
USDA Jul USDA Jun
Australia wheat 23.00 23.00
Canada wheat 23.50 25.00
Argy wheat 9.50 11.00
China wheat 113.50 113.50
EU-27 wheat 134.65 135.96
So they've bitten some of the bullet and lopped 1.5 MMT off Canadian wheat, a not very daring 1.5 MMT off Argy wheat and 1.31 MMT off EU-27 wheat.
Production estimates for next season's South American beans are unchanged from the June estimate at 51 MMT for Argy and 60 MMT for Brazilian, that's an increase of 19 MMT for the Argies and 3 MMT for Brazil on 2008/09's crop.
USDA Supply & Demand Report
What have the USDA thrown at us this time? Here's the magic numbers:
USDA Jul USDA Jun Trade Range Avg Est.
All wheat 2.112 2.106 2.076-2.167 2.107
Winter wheat 1.525 1.492 1.484-1.544 1.521
Spring wheat 0.507 NA 0.468-0.546 0.505
Durum 0.081 NA 0.082-0.088 0.085
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08/09 US End Stocks
Corn 1.600 1.600 1.600-1.850 1.692
Beans 0.110 0.110 0.086-0.130 0.107
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09/10 US End Stocks
Corn 1.550 1.090 1.290-1.828 1.567
Beans 0.250 0.210 0.115-0.384 0.229
Wheat 0.706 0.647 0.589-0.776 0.693
French Crop Estimates
FranceAgriMer (formerly ONIGC) say that this season's French soft wheat crop will come in at 35.8 MMT, down 3.2% on last season's 37 MMT. Durum wheat production will be 2.0 MMT this season, down from 2.2 MMT last year, they say.
Barley output will be 12.2 MMT (from 12.3 MMT last year), triticale 1.9 MMT (unchanged), oats 470,000 (also unchanged) and rye 120,000 MT (from 130,000 MT).
For the 2008/09 old crop marketing year they say that domestic wheat usage will be 14.9 MMT (14.2 MMT in 2007/08), exports 15.1 MMT (12.2 MMT) and ending stocks 2.8 MMT (2.7 MMT).
UK Pork Figures Scandalous
A shocking 59% of all pork and pork products consumed in the UK are imported, according to figures released by Parliament.
Lib Dem Shadow Environment Secretary Tim Farron says that allowing the supermarkets to impose their own voluntary code of labelling has allowed imported meat to legally use the Union Jack flag to imply it is British.
Farron says: "Within the meat industry, British producers stand proud because of their high animal welfare standards. But under this Government, higher standards have meant higher prices, leading to the situation we have today where only 41% of the pig meat eaten at our kitchen tables is produced on a British farm.
"Many of the animals which are imported and then sold as "British" have been reared according to standards which would be considered illegal in the UK.
"The public have the right to know the origin of the food they are buying. If people want to buy British food, they should be able to go into a shop and find those products."
Frankly I'm surprised at the supermarkets, I thought that they were working with the best interests of their hard-pressed British customers and suppliers in mind at this cash-strapped time. It's not about profit, it's gone beyond that, it's all about everybody pulling together. They've made that quite clear. This must just be a clerical error or something.
