THE February US Department of Agriculture Report was released on Friday last week, breaking a two-month drought on market sensitive data. Also released was the US Plantings Report and Grain Stocks Report.
Updates were also given for December US wheat export sales late last week.
The wheat market has not responded strongly one way or the other and has remained within its recent trading range.
There were a couple of positives from the various reports.
One was a much smaller than expected estimate of US winter wheat plantings.
They have come in at the second lowest on record, because of the delays to planting caused by the wet autumn.
It also means that a lot of the crop that did get planted, went in late, and into overly wet conditions.
Another positive was a 570,000t drop in global wheat ending stock estimates.
This extends the decline in global stocks year on year to 12.49 million tonne.
However, outside of those two factors, it was somewhat negative for wheat.
Firstly, the decline in stocks was driven by a 3.5 million tonne drop in Chinese stocks.
The USDA lowered its production estimate by 1.07 million tonnes and lifted consumption by two million tonnes.
The net result is that stocks outside of China have been lifted by 3.02 million tonnes.
Secondly, stock levels within the US were raised on the back of reduced usage, partly because of less seed use because of the lower plantings, but also lower use with less being needed for livestock feed.
US stock levels were raised by 980,000t, to 27.5 million tonnes, well up on the 16.065 million tonnes back in 2013-14.
So, the headwinds for wheat got just a little stronger on the back of rising stocks in the US, and globally outside of China.
It takes some of the pressure off the balance sheet and will allow the market a bit more of a buffer against any issues seen for the 2019 crop.
Another negative was Russia. Production estimates were lifted for its 2018-19 crop.
A 1.6 million tonnes lift has taken its crop to 71.6 million tonnes. It has also allowed a one million tonne lift in their export projections, to 37 million tonnes, while allowing their ending stocks to lift by 1.1 million tonnes to 6.47 million tonnes.
Russian ending stocks are down 5.4 million tonnes year on year. However, they may still be able to maintain strong export numbers in 2019 which is likely to keep the pressure on the pace of US exports.
The near term positive for the market is the reduced acreage in the US. If the crop has suffered from less than ideal planting conditions late last year, we could see some upward move in US futures.
