Wheat prices held near two-month lows after US officials made an unexpected upgrade to their forecast for world stocks of the grain, but forecasts for corn and soybeans were viewed more kindly by investors.
Chicago soft red winter wheat futures for December, which fell 2% amid market nerves in the run-up to the US Department of Agriculture’s flagship Wasde briefing, remained close to that level in the aftermath, standing down 1.7% at $8.13 ¾ a bushel.
The Wasde report, while trimming the forecast for the US wheat stocks at the close of 2022-23 to 571m bushels (15.5m tonnes), the lowest in 15 years, lifted the forecast for world inventories by 280,000 tonnes to 267.8m tonnes, reflecting increased expectations for Australian supplies.
The upgrade contrasted with investor expectations for a downgrade to the world wheat inventory figure.
UK > Argentina
“Production in Australia is raised 1.5m tonnes to 34.5m as above-average rain over the past month supported crop development and boosted yields, following widespread favourable conditions earlier in the growing season,” the USDA said.
The revision to the Australian harvest figure, and an 800,000-tonne upgrade in the UK wheat crop estimate, more than offset a 2.0m-tonne downgrade to 15.5m tonnes to the Argentine output figure.
Indeed, at 15.5m tonnes, the UK harvest was seen as exceeding Argentina’s for the first time in seven years.
“Argentina production is lowered, as continued widespread dry conditions through most of October further eroded yield potential, especially in northern areas,” the USDA said.
South Africa downgrade
By contrast, for corn, the USDA made a small downgrade to the estimate for world stocks at the close of 2022-23, in line with market expectations, including a US inventory figure which, at 1.18bn bushels (30.0m tonnes), fell short of the consensus forecast.
Although the USDA made an unforeseen increase to its estimate for this year’s domestic corn yield, by 0.4 bushels per acre to 172.3 bushels per acre, most of the extra output was seen being swallowed up in livestock rations.
Among other major exporters, the estimate for South Africa’s output was reduced by 600,000 tonnes to 16.7m tonnes, “based on lower expected area”.
Chicago corn futures for December recovered from early losses to stand up 0.3% at $6.69 ¾ a bushel immediately after the Wasde briefing was published.
Meal in demand
Soybean futures fared a little better, in adding 0.6% to $14.54 a bushel for January, holding on to early firmness after the Wasde forecast for US stocks at the close of 2022-23, while upgraded by 20m bushels to 220m bushels, came in only a little ahead of forecasts.
While the briefing unexpectedly raised the estimate for this year’s US yield, it also upgraded the forecast for the US crush to a record 2.25bn bushels (61.1m tonnes), “on an increased domestic soybean meal disappearance forecast”.
The USDA raised by 250m short tons to 39.7m short tons it forecast for US soymeal consumption.
While keeping at $14.00 per bushel the forecast for US farmgate soybean prices this season, the soymeal figure was upgraded by $10 to $400 per short ton.