Markets remained mixed post WASDE.

• Chicago wheat July contract down US2.75¢/bu to 514.5¢;
• Kansas wheat July contract down 5.75c to 469.25¢;
• Minneapolis wheat July contract up 2.25c to 521¢;
• MATIF wheat September contract down €1.50 to €186.50/t;
• Corn July contract up 3.75c/bu to 322.25¢;
• Soybeans July contract down 3¢/bu to 852¢;
• Winnipeg canola July contract up $C0.80 to $472.10/t;
• MATIF rapeseed August contract down €0.50 to €370/t;
• Brent crude July contract up US$0.35 per barrel to $29.98
• Dow Jones index down 457 points to 23765;
• AUD weaker at $0.6462;
• CAD weaker at $1.4073;
• EUR firmer at $1.0853.

Markets

In the wheat pits Chicago settled down -2.75 usc/bu closing at 514.5usc/bu, Kansas was -5.75 usc/bu lower to settle at 469.25usc/bu, while Minni rallied 2.25 usc/bu to go out at 521usc/bu. Corn gained 3.75 usc/bu to go out at 322.25usc/bu while Beans were down -3 usc/bu to settle at 852usc/bu WCE Canola rallied 0.8 CAD/mt closing at 472.1CAD/mt with Matif Canola finishing lower by -0.5 Eur/mt. In outside markets the Dow Jones fell -109.33 points, Crude was up 1.25 bbl the Aussie was -0.0018 points lower to settle at 0.64543, the CAD rallied 0.0072 while the EUR gained 0.0041.

USDA supply/demand reports were released overnight against a backdrop of relative mayhem. USDA’s best guesstimates, for the most part, were in line with market expectations. As always however, there’s enough overs-and-unders to keep the trade’s attention.

Global wheat abundance

USDA indicated that they expect larger supplies, increased trade, greater consumption and higher ending stocks. Aussie new crop was pegged at 24 million tonnes (Mt), up 8.8Mt from current crop, which seems a fair place to start. USDA projected the wheat crop in Argentina at 21Mt, Canada at 34Mt, EU at 143Mt down nearly 12Mt from 2019/20, Russia 77Mt and Ukraine 28Mt. Boil all of that down and global ending stocks will increase by 5pc to a record large 310.1Mt, 52pc of this will be sitting in China.

The numbers They probably pose more questions than answers. The USDA would acknowledge Black Sea region and EU conditions are still evolving and while a 77Mt Russian production figure is fair today, the spread in trade ideas will feed straight into export availability and will have a material impact on Aussie values.

US wheat old crop carry out was tickled up by 8 million bushels (mbu) to 978mbu, slightly above the trade guess of 972mbu. They cut exports, understandable given price spread, but increased food use which was a surprise but not a game changer. New crop carryout was a heavy 909mbu (24.74Mt) compared with the average trade guess of 821mbu. Lower production offset lower feeding attributed to the large wheat corn price spread and lower exports, the result of US fob wheat price spreads to competing origins.

Row crops mixed news

Corn – this was a big focus leading into the report – which highlights the fact that sometimes the market reacts to the difference between the USDA number and the average guess rather than actual numbers. The appetizer was some rejigging of the old crop balance sheet which put ending stocks at 2.098bbu vs the guess of 2.224bbu. While new crop carry out was an eye watering 3.318bbu it was actually below the average trade guess of 3.389bbu. Still some room to move here as ethanol is sitting at an ambitious 5200 which implies a rebound in total gasoline demand – all up, a 22.4% stocks to use, the highest since 1992/93 which saw prices sitting around the mid $2/bu.

Soybeans – US old crop carry out blew out to a heavy 580mbu vs the trade guess of 488mbu, driven by a lower export figure. In new crop, the USDA had higher supplies, crush, exports and, somewhat amazingly, lower ending stocks than 2019/20. A driver of this tightening is a higher export figure of 2.050bbu which is all about China – the USDA took China imports to 96mmt and assumed that the US and China have kissed and made up.

Australia

Back locally, markets were choppy again yesterday across the board. Geelong/Melbourne delivered markets seemed to have narrowed in on new crop for January plus, but others still remain wide or offer side only. Grower interaction has been on the low side with planting still in full swing. New crop barley grower bids in the WA were back up $10-15 and still hard to pin a true value. Smalls traded in Kwinana yesterday on old crop BFED at $270 FIS off $55/mt from the highs of the market we saw a month or so ago. Along the east coast old crop wheat markets firmed a fraction, through some of the NSW domestic homes small liquidity going through with some buyers filling some holes here and there but the market still largely offer side. Eastern Australia ASX wheat and barley contracts settled yesterday for January, wheat $306.50/mt and $226/mt for barley.

Crop progress is in good shape, rain maps showing some expected precipitation for next week but nothing getting growers too excited about yet. We need to see some more confidence in the models to all line up.

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