Morning Markets: Soya strengthens in post-WASDE trading

Yesterday’s April WASDE report from the USDA, viewed as supportive for soybeans but neutral for wheat and corn, is reflected in early Wednesday  market movements. There is more concern for the 2018/19 marketing year with late plantings in North America and Europe reducing harvest yield potential.

The USDA lowered global soybean ending stocks for 2017/18 by 3.6m tons from its March estimate of 94.4m tons last month to stand at 90.8m tons, in line with reduced stocks in Argentina, Brazil, and the EU.

It reduced its projection for Argentina’s soybean production by 7.0m tons to 40.0m tons, through a combination of a smaller crop area and the impact of dry weather, which would be the smallest outturn since the 32m tonne harvest of 2009. It also raised Brazil’s harvest estimate by 2m tons to a record 115m tons.

Argentina’s shortfall is already causing crushers there to look for additional supplies to process – the USDA export report notes that 120,000 tonnes of US soybeans have been booked by Argentine buyers delivery in the 2018/19 marketing year starting September 1st  – the largest such sale since 1997.

CBOT soybeans closed up 3c at $10.50 a bushel on Tuesday, although they had touched $10.64/bu during the day. Early Wednesday trading saw soybeans strengthen to $10.55/bu.

Wheat down for first time in April

The April WASDE raised world 2017/18 wheat ending stocks to 271.2m tons, a new record figure and 2.3m tons higher than the 268.9m tons March estimate. While global consumption is rising steadily, it is more than offset by greater production to swell the carryout at the end of June.

While the USDA predicts little overall change in the volume of wheat traded on international markets, it highlights the sharp increase in Russian wheat exports. It predicts these will rise by 1m tons to 38.5m tons for 2017/18, a 10m ton rise on last year’s export volume which was also a record.

In addition, the current political and economic sanctions pressure on Russia has weakened the rouble, making Russian grain even more competitive on export markets.

CBOT wheat closed 0.3% higher at $4.94 a bushel on Tuesday, although had fallen back 0.51% to $4.89-3/4 bu early on Wednesday, breaking a steady increase since April 2nd.

Corn up 0.26% in early trades

Global corn ending stocks for 2017/18 are projected at 197.78m tons in the April WASDE, down from 199.17m tons in March and 230.9m tons a year earlier.

Corn production in Argentina and Brazil is marked down by a combined 14.5m tons, due to dry conditions in the growing season and a smaller planted area in Brazil.  Lower corn exports from these major producers could lift US exports in the first half of the 2018/19 marketing year.

The US corn ending stocks are reduced to 0.550 billion bushels (0.555bn bu in March), as corn is expected to continue displacing wheat in animal feeds over the rest of 2017/18.

Chicago corn futures were up 0.26% to $3.90-3/4 bu on Wednesday morning after closing 0.4% down on Tuesday.

Further weather delays for plantings

Futures International’s weather updates predicts the drought conditions continue across the south-western US plains through the next two weeks, where winter wheat crops are already suffering.

Meanwhile, rainfall is forecast for the northern US plains and for Canada’s prairies, further delaying spring wheat and soya plantings, and starting to interfere with corn progress.

But planting conditions are expected to improve this week across the US delta, south eastern and lower Midwest states.