Posted on September, 14, 2022 at 07:06 am
Yesterday, the USDA released their latest World Agricultural Supply and Demand Estimates (WASDE). The September report trimmed the global 2022/23 production outlook for maize (down 7Mt to 1,172.6Mt) and soyabeans (down 3.0Mt to 389.8Mt). This pushed global ending stock forecasts lower too for maize and soyabeans.
In response yesterday, Chicago maize (Dec-22) and soyabean (Nov-22) futures climbed $4.34/t and $27.92/t, respectively. This came as falling US supplies surprised the market.
For maize, US production was pulled back 10.5Mt this month to 354.2Mt, on lower harvested area and yield. EU production was reduced by 1.2Mt in this report, to 58.8Mt. Could we see further reductions to EU forecasts? Stratégie Grains currently pegs EU maize production at 55.4Mt, 3.4Mt lower than the current USDA forecast.
These production trims follow reducing US and EU crop conditions over the past few months. In the US, demand too was pulled back for maize used for ethanol and feed use, as well as reduced exports. These reductions counteracted increases to Ukrainian and Chinese production forecasts.
For soyabeans, forecasted US production was reduced 4.1Mt to 119.2Mt on lower area and yield. US yield forecasts dropped to the lowest since 2019/20. This led to a fall in forecasted global ending stocks, back below 100Mt for this season.
Wheat global production raised
Whereas global wheat production saw a boost in this September report, on higher forecasted Russian and Ukrainian production. The USDA increased the Russian crop to be forecasted at 91Mt and Ukrainian crop at 20.5Mt. Though Russian exports remained pegged at 42Mt.
On higher production and imports, higher global domestic use is expected this season for wheat and global ending stocks forecasted slightly higher. Though global ending stocks are still forecasted the smallest since 2016/17.
Maize acts as a ‘floor’ of support for wider grains, therefore strong maize prices strengthen other feed grain prices. Despite a more bearish report for wheat yesterday, the supply and demand balance remain tight. Yesterday little movement was made on the UK feed wheat contracts, supported by this tight maize picture, and moving on ‘new’ news on Ukrainian exports.
For soyabeans, the reduction of the US supplies surprised the market and is something to watch going forward in vegetable oil availability. Though South American supplies are still expected to be large, longer term. For now, demand remains key for price direction with recessionary behaviour something to watch.
Source: AHDB