New wheat highs with choppy prices – Louise Gartner
Last week, wheat saw plenty of price action but only managed slightly higher gains for the week. An early week burst higher put prices into new highs for the move in Chicago and new contract highs for Kansas City and Minneapolis, but the rest of the week saw a choppy, sideways action that deflated much of the early strength.
Australia again dominated the news for most of the week as more rains caused severe flooding and increased damage to the ripe wheat. Talk of abandonment in some regions led to projections of losing up to 2 MMT in those wet areas. So, even while production estimates were being increased by Australia, USDA and others, there were already estimates being put forward of production losses.
Informa released their latest estimates of Australian production last week with a 26 MMT projection, up .8 from last month and up 18% from last year’s 22 MMT crop. Australia’s ABARE is projecting 26.8 MMT, which would be a record and exports at 16.0 MMT, compared to last year’s 14.8 MMT. In USDA’s supply/demand report issued on Friday, they increased Australia’s production by 1.5 MMT to 25.5 MMT, but lowered exports 1.0 MMT to 15.0.
Needless to say, it is a huge disappointment for Australian producers who watched a potential record setting crop get washed away by rains and floods. If there’s any comfort to be had, at least there is a market for the lower quality wheat, and the Southeast Asian buyers are already booking shipments for their feed manufacturing industry.
USDA’s supply/demand report contained a few surprises for corn and wheat as they raised US ending stocks for both. While the changes were minor, it took the market by surprise as they’d been expecting a decrease for both. They left feed wheat usage unchanged but decreased food usage by 10 million bushels, which was directly reflected in a 10 million increase in ending stocks to 858 million bushels.
Corn saw a 5 million bushel increase in ending stocks to 832 million after imports were raised by a like amount. Ethanol and feed usage were left unchanged at 4.8 billion bushels despite a record setting pace of production so far this year and expectations that we’d see at least a slight increase. Corn’s ending stocks are now still the smallest in 15 years and half of just a year ago.
Soybean exports were raised for the fourth month in a row, up by 20 million bushels to1.59 billion, which then lowered ending stocks by 20 million to 165 million, still 5 million higher than trade expectations.