Wheat and corn lower, while soybeans find strength and canola weakens.
Wheat softened overnight following the release overnight of the USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report. Markets were showing considerable strength until the report came out and pulled the rug out from under them. Wheat markets were previously optimistic, with pre-report ideas that the USDA would have to make some cuts, which would create more US stocks to use. The Russian crop was increased 3 million tonnes (Mt) to 71Mt, which was at the top end of market ideas, with most expecting something between 68-71Mt. Another question mark from the report comes with Russian export ideas of 35Mt, which is still up in the air, considering there has been a great deal of talk surrounding Russia’s potential decision to export only 25Mt.
The primary catalyst for the collapse in grain values was higher-than-expected corn yields in the WASDE report. They came in at a whopping 181.3 bushels per acre (bu/ac), versus initial market ideas of 177.4 bushels. For some time we have been discussing the likely outcome falling between 175-180 bushels, and as a result, corn fell almost 14c. With a big crop comes big usage, and due to this, the carryout has increased 5 per cent from August.
The bean market managed to climb almost 9c per bushel, despite yield estimates increasing to 52.8bu/ac from 51.6bu/ac in August. The positive sentiment in the market has come from export potential with China, as the US and China are expected to have discussions before the end of the month.
Domestically, the outlook remains unchanged, with dryness still the main talking point. Over the next eight days, Western and South Australia could be lucky enough to get a sprinkle of up to 5 millimetres of rain. Victoria’s Western District can expect up to 15mm, with the forecast drying up in the Wimmera and Mallee regions to its north. New South Wales and Queensland can expect little to no rain over the coming week.
Source: Lachstock Consulting