The US Department of Agriculture (USDA) released its World Supply and Demand Estimates (WASDE) report yesterday. It said its data regarding China’s supply and demand estimates for corn, peanuts, rapeseed, rice, soybeans, and wheat incorporate historical revisions to area and production published by China’s National Bureau of Statistics (NBS).
James Webster, senior analyst, AHDB Market Intelligence, weighed in on the report for us:
“China was the standout in terms of numerical change, corn stocks went through the roof on the month, but the USDA has also worked backwards to add the stocks into previous years. This further highlights the reasoning why we excluded China from stocks-to-use calculations, the picture for the country is so uncertain, and can mask the true direction in the market.
“The more important figures, in my opinion, are in regards to the major corn exporter stocks. They are up slightly, driven by an upward revision in Argentine corn.
“However, there is also a revision to US corn production and stocks, down 3.85 million tons (Mt) and 1.96Mt, respectively. These changes outweigh the Argentine stock figures and go some way to explaining the marginally bullish reaction of the Chicago maize [corn] futures last night.”
For wheat, the analyst said there were with no great surprises:
“The world picture was more bearish, with an increase in Chinese wheat stocks.
“Major exporters stocks were up very marginally with a slight upward revision in EU stocks. Meanwhile, 1.5Mt was shaved of Australian export forecasts and 1Mt off the country's production, something the market was probably expecting to happen and had likely priced in.”
WASDE in detail
The USDA said this month’s 2018-19 US corn outlook is for lower production, reduced feed and residual use and exports, and smaller ending stocks. US corn production is forecast at 14.626 billion bushels, down 152 million from last month on a reduced yield forecast.
US corn feed and residual use is lowered 50 million bushels based on a smaller crop and higher prices. Exports are reduced 25 million bushels based on expectations of increased competition from Ukraine. With supply falling more than use, US corn ending stocks are down 77 million bushels from last month.
The USDA forecast that global coarse grain production for 2018-19 would be 29.9Mt higher, at 1,373.3Mt, with that greater corn production forecast for China accounting for a large portion of the increase.
"For the time period encompassing the 2007/08 to 2017/18 marketing years, NBS increased corn total production by an unprecedented 266 million metric tons."
Aside from China, the USDA forecasts that corn production will be higher for Ukraine, Argentina, Kenya, Moldova, and Russia. However, it predicted that EU corn production will be lower, mostly reflecting reductions for Hungary, Poland, and Germany.
The USDA raised corn exports as well for Ukraine, Argentina, and Moldova, while hiking imports for the EU, Vietnam, and Iran.
Australia’s wheat crop for 2018-19 is estimated to be 1Mt lower at 17.5Mt on continued drought, said the USDA.
The US Department of Agriculture (USDA) also predicted that Australia wheat exports would be 11.5Mt for 2018-19, down 12% from the 13Mt estimated last month and the lowest total since 2007/08.
In terms of global 2018-19 wheat supplies, the USDA reckons those will increase 6.7Mt on both higher production and beginning stocks. The vast majority of this change stems from the updated production data released by China’s government. Its NBS raised its 2018-19 wheat production forecast, with both higher harvested area and yield.
The USDA has made wheat production cuts totaling 2.2Mt for Pakistan, Morocco and Ukraine, while the US agency estimates the wheat in Algeria will rise by 900,000 tons.
The WASDE report also anticipates that global wheat exports will be reduced by 1.6Mt tons with almost all of that reduction stemming from the smaller crop in Australia.
Cut in global soybean output
The 2018-19 global oilseed outlook includes lower production, exports, and increased stocks compared to last month.
Lower production of soybeans, cottonseed, peanuts, and rapeseed is partly offset by a higher forecast for sunflower seed. Reduced global peanut and rapeseed production is largely driven by historical revisions issued by China’s NBS, according to the latest WADSE data.
The USDA has lowered global soybean production by 2Mt, with lower production for the US and Argentina but increases for China, India, and Ukraine. Global soybean exports are reduced 2Mt to 155.4Mt.
It said lower US soybean exports are somewhat counterbalanced by a 2Mt increase for Brazil and higher shipments out of Ukraine and Russia.
“With limited US commitments to China so far this marketing year, China’s soybean imports are lowered 4Mt to 90Mt. China’s crush is also lowered, but protein meal consumption growth is expected to remain positive with support from available foreign exportable supplies.
“South America is expected to capture more of China’s soybean market while the US is likely to capture more market share in the rest of the world, particularly in the second half of the marketing year when those imports typically trend higher,” noted the USDA.
The USDA said that global oilseed stocks are up 2.4Mt to 126.2Mt mainly on higher stocks of soybeans and sunflower seed.
Global soybean stocks are up 2Mt to 112.1Mt, with higher stocks in Argentina, India, and the US States; those levels are partly offset by lower stocks in China and Brazil.