The U.S. Department of Agriculture’s supply and demand report that was released Friday morning was considered strongly negative for wheat futures and slightly negative for corn and soybean futures.Markets rallied in recent days on expectations that weather problems around the world would cause the USDA to reduce crop sizes. It did make many downward revisions, but the cuts were not as deep as expected.The USDA increased its forecasts of the size of the American wheat crop to 60.3 million tonnes, up from 56.26 million in June and beyond what traders had expected.It reduced the size of crops in other major wheat producing countries, but the reduction was not as large as expected.The USDA now says U.S. wheat production will equal last year’s crop. The hard and soft red winter wheat crops are a little smaller than last year and spring hard red and white wheat crops are a little larger.It put durum production at 104 million bushels, down from 109 million bu. last year.The department lowered world wheat production for 2010 to 661.07 million tonnes from 668.52 million in June. That compares to 679.85 million tonnes in 2009-10.It reduced the Canadian wheat crop by about four million tonnes. Production in the former states of the Soviet Union (Russia, Ukraine and Kazakhstan) are down 7.5 million tonnes and European Union production is down about one million tonnes.The USDA did not alter its forecast for the Australian crop despite weather problems in Western Australia. It increased the size of China’s wheat crop.The department did not alter its U.S. corn yield forecast of 163.5 bu. per acre. Last week, it lowered the corn seeded area to 87.9 million acres.It forecast a corn crop of 13.245 billion bu. Total use is estimated at 13.36 million tonnes, causing year end stocks for 2010-11 to fall to 1.373 billion bu., down from 1.478 billion this year.Traders had expected a larger reduction in corn ending stocks and the market was slightly down in the morning, with worries about heat in the coming days lessening the effect of the USDA report.The department forecast the average farm price for corn would climb to $3.45-$4.05 US per bu. from $3.50-$3.90 per bu. in the current crop year.The USDA lowered its U.S. oat production outlook to 88 milion bu. from 90 million bu. in June and 93 million last year due to smaller harvested area.It projects an average farm price for oats of $2.10-$2.70 per bu., up from $2.02 in the current year.The USDA forecast U.S. soybean production of 3.345 billion bu., up from 3.31 billion in June, which was in line with traders’ expectations.It forecast ending stocks will be 360 million bu., the same as in June and up from 175 million at the end of the current crop year.Traders had expected slightly lower ending stocks.
Bigger U.S. wheat crop overshadows global wheat reduction
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