Wheat sold off after the USDA failed to acknowledge the global production cuts that the world has endured in the past six weeks. Implied volatility in Sep Soft Red Winter (SRW) wheat  finished at 29.375 per cent. It is telling that wheat prices in Europe didn’t move, in spite of the generous production estimates. Matif wheat closed fractions lower, down €0.25 to €210.75. This sell-off should be met with decent consumer interest, given that the global flat price will not fall much in response to the move. USDA left Australia’s production at 22 million tonnes (Mt), higher than last year’s figure, with an export forecast at 16Mt. This is 3.5Mt above the Australian market’s expectations. The Commitment of Traders (COT) report on wheat came in at 11,000 contracts for SRW, and 34,600 contracts for Hard Red Winter wheat, and the Minneapolis position fractions above square. Now that we are through the report, it will be interesting to see whether momentum-selling from funds will drive prices lower, or whether bargain buying from consumers will prevail. It’s hard to see significant downside from here.

Higher yields pushed corn lower, with the USDA coming in above expectations at 178.4 bushels per acre (bpa) versus 176.2bpa previously. This increased US carryout by 3.35Mt to 42.7Mt, when the market was looking for 41.4Mt. They attempted to balance this with an increase in exports, up 125 million bushels (Mbu) to 2350Mbu, but this is still seen as being too low, given the state of the global balance sheet. The COT had funds short 41,900 contracts, compared with -63,600 last week.