Higher WASDE projections send markets down

Weather news did not offset higher estimated supplies and drove all crop commodities on Chicago’s market down after today’s American report.

The U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates came out Aug. 10 and pushed traders to sell positions because the optimism of tighter supplies of wheat and canola didn’t offset reports of a record U.S. corn crop and an increased estimate of soybean production from the previous month’s reports.

World wheat supplies are estimated in the WASDE to drop by 6.4 million tonnes and with half the European drought-impaired wheat crops in the bins, the accuracy of that report is likely reasonably good.

At the same time, Russian wheat production is rated above previous estimates with the crop in good condition. The country is on-track to be the world’s largest wheat exporter for the second year running, with 31.8 million tonnes shipped from its 61.9 million tonnes of production.

Overall, the European crop is estimated to be at the lowest level in six years, 4.1 million tonnes below the average at 20.9 million tonnes.

A drop in global wheat consumption, largely on the animal feed side, is expected to cut global consumption of the crop for 2018-19 by 4.6 million tonnes.

In the end, global-ending stocks are expected to fall by 1.7 million tonnes, to 235 million, off by five percent from last year’s record, says the report.

U.S. oilseed production is projected to rise by seven million tonnes to 123 million, with an average yield of 51.6 bushels per acre on 88.9 million acres. That is up 3.1 bu. per acre over last month’s estimates and 2.5 bu. more than last year’s actual average.

This added to the effects on overall supply caused by last season’s lower ending stocks, and puts American soybean supplies at a record level of more than five billion bu.

The markets responded and moved lower by noon.

Oilseed consumption is expected to increase, however this won’t offset the larger global production of soy, peanut, cottonseed.

Rapeseed and canola production are expected to be lower than last year, but Russia and Ukraine are projected to yield more than previously estimated because of favourable conditions for crop maturity.

Overall, global oilseed stocks should rise by 7.5 million tonnes over previous estimates to 108 million this year.

Corn may set an American record for production at an average of 178.4 bu. per acre. The USDA Crop Production report from Aug. 10 increases the yield by 4.4 bu. per acre over last month.

While corn use is growing globally, the supplies are rising faster than the disappearance, pushing ending stocks up to an estimated 1.7 billion bu. in the U.S.

USDA average, seasonal farm-price estimates for 2018-19 show wheat up 10 US cents per bu., in a range from US$4.60 to $5.60. Corn is down 20 cents, in the $3.10 to $4.10 range, while soybeans are now off 35 cents from the last report, at $8.90 per bu.

On nearby markets in Chicago, Kansas City wheat was off 16 and half cents at noon, down to $5.62-1/2. Hard red winter was down 17 1/4 cents to $5.47 1/4, while Minneapolis hard red spring wheat fell 18 3/4 cents to $6.11. Corn was off 10 1/4 to $3.59. Soybean fell 39 cents to $8.48 3/4.

Canola tumbled C$6.70 to $502 per tonne for November.

Contact mike.raine@producer.com

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