Little surprising for agri-commodity market watchers in July WASDE report
The bulk of that revision was due to changes to US production, revised down to 381MT from 406MT.
“However, following the release of the recent US area changes, markets had already factored in cuts to US production, so, with the release of the WASDE report, Chicago maize futures failed to make gains,” Peter Collier, market analyst, CRM AgriCommodities Ltd, told FeedNavigator.
Additionally, while weather outlooks in the US remain favorable, good yields look likely, he added.
Wheat output lowered
Global wheat production was also trimmed in the July 10 released WASDE report, down 4.13MT to 769.31MT.
Driving the majority of the cuts in wheat output were reductions in the EU and US, both down 1.5MT to 139.5MT and 49.6MT. Russian wheat production was also trimmed, down 0.5MT to 76.5MT and Moroccan wheat, decreasing by 0.8MT to 2.7MT, increasing their import requirements.
“While there were production estimate downgrades, the reductions in the EU were to be expected, given the dry conditions and outlook for production in the UK and northern Europe.
“Reductions in the US were also expected, due to the previous area estimate reductions. With the reductions anticipated, the wheat reductions have offered little support,” continued Collier.
Consumption estimates were also trimmed for 2019/21 and 2020/21.
US maize consumption was trimmed 3.7MT for 2019/20 and 4.5MT in 2020/21 as ethanol demand is still weighing on maize markets. Wheat consumption was trimmed too, EU domestic consumption trimmed by 1MT due to falling production and cheap maize.
Oilseeds outlook
The WASDE report though, on the face of it, contained a couple of bullish factors for oilseed markets, said the analyst.
“Global production marginally decreased by 300KT, and global consumption was increased by 1.8MT, driven by an increased consumption in China. However, the devil is in the detail for soybeans, and old crop US soybean domestic consumption was trimmed by 1MT, increasing ending stocks and the supply for the remainder of 2019/20 and into 2020/21.”
