Mixed for grains and oilseeds.
Wheat finished lower, with the USDA’s World Agricultural Supply and Demand Estimates Report (WASDE) failing to address lower global production in Australia and Canada. They had the Aussie crop at 18.5 million tonnes (Mt), with exports at 13Mt. Russian exports were left unchanged at 35Mt. Implied volatility finished at 20 per cent. Matif Wheat was up €0.75 to €203.5€ and Black Sea wheat was up $0.25 to $248.75$. Until US export sales prove the USDA wrong, it is hard to see much traction for wheat in the near term.
Corn rallied as the USDA reduced its yield estimate for US corn to 180.7 bushels per acre (bpa) from 181.3bpa in its previous report. USDA also increased its estimate for exports, which led to a lower-than-expected carryout figure. Corn has a good demand profile and lower yield expectations.
Soybeans finished higher, supported by a lower-than-expected US yield forecast in the WASDE report. The yield came in at 53.1bpa versus market ideas of 53.3bpa, while harvested acres were reduced by 600,000t. What the USDA failed to address was the ongoing trade dispute with China, and they left bean exports and Chinese imports at similar levels, which seems strange, given the low export sales and ongoing trade disputes. Soybean meal was up $1.1/t and soy oil was down 37 points.
East coast markets rallied another $4/t yesterday, with consumptive bids outweighing potential sellers. We were never going to stay under Western Australian import parity for long, and the market is quickly adjusting prices to reflect that. There is still some short-term downside potential if the weight of WA harvest volume adds pressure, but we are around export parity there already, and the demand profile is larger than we have seen for some time, so it could be short lived. Weather wise, we have seen good falls in central New South Wales, and the forecast is still looking promising, notably for Queensland where 25-50 millimetres is forecast over the next eight days. Cash markets have harvest getting under way amidst a sea of local and global demand, but with such high-decile prices, it will be interesting to see how the grower behaves.