The United States Department of Agriculture (USDA) released their November World Agricultural Supply and Demand Estimates (WASDE) to the market last Friday (Saturday morning down under) and there was nothing to get the trade, or futures markets, too excited.
Chicago Board of Trade (CBOT) December wheat futures closed the week at 5101/4 cents per bushel (c/bu), down 21/4 c/bu on the day and down 53/4 c/bu for the week. Wheat futures have been trending downward since a three-month high of 5321/4 c/bu was set on October 18. That equates to a fall of almost AU$12 over the last three weeks.
The December corn futures contract closed last Friday's trade at 3771/4 c/bu, up 2 c/bu on the day but down 12 c/bu for the week.
The soybean contract for November closed at 9191/2 c/bu, down 51/2 c/bu on the day and down 43/4 c/bu for the week. Like wheat, both corn and soybean futures have been trending lower in recent weeks and have lost the equivalent of just under AU$12 and just over AU$11 respectively since the highs of mid-October.
The WASDE wheat production numbers were basically a juggling act, the result being a small global increase of around 0.3 million metric tonne (MMT). Australian production was decreased by 0.8MMT to 17.2MMT, similar to last year's final number. However, this is still around 1.5MMT above many domestic trade estimates, and a further reduction is expected in the next report, due for release on December 10.
With global wheat demand remaining static, the washup of all of the production changes was an increase in world ending stocks to a record 288.3MMT, 142.6MMT (49pc) of which is held outside of China.
On the barley front, the WASDE report was slightly bullish. The USDA cut Australian production by 0.2MMT to 8.4MMT. While this may be achievable, it appears to be on the high side based on the hard finish experienced in almost all the major barley production regions of the country.
There were several decreases to global corn supply, but most had already been factored into trade calculations, hence the subdued futures market reaction. US production was down by 3MMT after the yield forecast was decreased to 167 bushels per acre (10.5MMT/ha).
The soybean numbers were quite benign, with global production down by 2.4MMT, mainly in India and Canada, and global demand down by 2.4MMT, primarily in India, China and the US.
The grain market needs news, and the WASDE report provided nothing that wasn't already known and factored into global thinking.
From a wheat and barley perspective, 2019/20 production is basically known, even though the USDA numbers still need a little tweaking in several key jurisdictions.
A resolution, or otherwise, to trade disputes involving China is a key driver in the near term. The big one is the US standoff, with Trump seemingly dousing the most recent positive news with his Twitter diplomacy.