“In the last WASDE report, global wheat supplies are reduced, primarily on lower production forecasts for Kazakhstan and Iraq. Projected 2018/19 world trade is fractionally higher as larger EU and Brazil exports more than offset reductions for the US and Mexico. Global imports are raised for Algeria, Morocco, and the Philippines while decreased for Bangladesh, the EU, Mexico, and Venezuela. Projected 2018/19 world consumption is reduced 5.1 million tons with India accounting for 3.0 million of the decrease as its total wheat consumption is lowered to 95.0 million, compared to last years 95.8 million. Global ending stocks are increased 3.0 million tons to 270.5 million, down 3 percent from last years record. Russian wheat export expected from 33.6 MMT to 37 MMT – it’s a huge field to manipulate prices in the next few month.”

Elena Pitek (Neroba) Head of Analytics Marcopolo Commodities SA Market almost start leaving without USDA report, but it was premature. New report shows all of us how fare they can be from local data. Last WASDE report was released 8 of March mention that we had slightly higher corn carry over than expectations. But it’s a clear true story. Trading wasn’t active and demand was a little weaker. Previous months price was increasing waiting for South America crop and supporting by expensive wheat. But with the renew numbers main buyers realize that corn is really overproduced. Both oversupply and weak demand started to put pressure on prices. 2018/19 US corn outlook is lower corn used for ethanol, reduced exports, and larger stocks, cause Brent went down. Corn used to produce ethanol in the US is lowered 25 million bushels to 5.550 billion, and the pace of weekly ethanol production during February as indicated by Energy Information Administration data.

Brazil corn production is unchanged, with increased yield expectations offset by a reduction in area. Corn production is raised for India, but lowered for South Africa. But if we have a look for Indian AgMin numbers, we will see reduction in summer corn crop from 20 MMT to 16 MMT. Australia coarse grain production is higher, as a forecast increase in barley more than offsets a reduction for sorghum. Actually as per hot and dry weather Australia lost from 10 t0 40% of crop depends of kind, but market already appreciate it.

Major global trade changes for 2018/19 include higher projected corn exports for Argentina and Ukraine and reduction for the US. Chinas coarse grain imports for 2018/19 are lowered, reflecting lower forecast sorghum and barley imports. Corn imports are raised for the EU and Canada. Major change in USDA report was for US corn export, cut by almost 1.9 MMT to 60.33 MMT “reflecting diminished US price competitiveness and expectations of increased exports” for competitors. CBOT is under the pressure of high supply from all the main producers.

Argentina and Ukraine are poised to win US market share, their export forecast 2018/19 was upped by 1 MMT and 0.5 MMT m/m to 30 MMT and 29 MMT, respectively. This moved Ukraine closer to the top of world corn exporters, as now it is equal with Brazil, struggling for the third place. Exactly those 0.5 MMT are seemingly going to the EU, whose import forecast was upgraded by 0.5 MMT m/m to 21.5 MMT. Anyway, for today Ukraine sold almost 17MMT of corn and waiting for additional demand from China, India and EU.

World corn crop was updated reflecting higher forecast for India by 1.7 MMT m/m to 27.8 MMT, which was only slightly compensated by lowered Sth African crop by 0.5 MMT to 11 MMT. But as I told, it’s a tricky cause India expect for lower crop and ready to cut import duties. Brazil corn production is unchanged 94.5 MMT, with increased yield expectations offset by a reduction in area. Fast planting progress improves yield prospects for safrinha crop corn, while area is down reflecting updated expectations for both 1st and 2nd-crop corn.

World consumption was upped by a heavy 3 MMT, coming from China “as they push a hogdiet heavy in corn and lower in soybean meal”. This is the result of Trade War between the US and China, when Chinese changed feed formula trying to cut soybeans consumption and buy less from the US. However, it is expected to be satisfied at cost of its own stocks leaving Chinese corn import forecast steady m/m at 5 MMT. After all, world corn ending stocks were cut by 1.3 MMT m/m to 308.53 MMT, which appeared within the range of market expectations, but slightly below its average. Fundamentally there are no any reason for bullish corn market in the near future, and South America corn is more attractive

The outlook for 2018/19 US wheat this month is for larger supplies, lower exports, reduced domestic use, and higher ending stocks. Supplies are increased by 5 million bushels on higher imports. Wheat exports are lowered 35 million bushels to 965 million. Projected 2018/19 ending stocks are raised 45 million bushels to 1,055 million. The most interesting is that 2019/20 harvest area in the US is the lower for the 100 years and wheat was damaged by frost.

Global wheat supplies are reduced, primarily on lower production forecasts for Kazakhstan and Iraq. Projected 2018/19 world trade is fractionally higher as larger EU and Brazil exports more than offset reductions for the US and Mexico. The EU is increased 1.0 million tons to 23.0 million as its recent improved export competiveness is expected to continue for the remainder of the trade year. Global imports are raised for Algeria, Morocco, and the Philippines while decreased for Bangladesh, the EU, Mexico, and Venezuela. Projected 2018/19 world consumption is reduced 5.1 million tons with India accounting for 3.0 million of the decrease as its total wheat consumption is lowered to 95.0 million, compared to last years 95.8 million. This reduction is based on an upward revision to the official Indian government wheat stocks estimate for 2018/19. Global ending stocks are increased 3.0 million tons to 270.5 million, down 3 percent from last years record. WASDE report was neutral for Black Sea market: EU has stolen 1 MMT of US export prospects. From the very first look, USDA seems bearish on 3 MMT higher m/m world wheat stocks of 270.53 MMT, much above 269 MMT in highest market expectations. Herewith, it is still “-3% from last year’s record” and it is coming mostly from 3 MMT cut in Indian consumption, self-sufficient market this season, forgotten by BS exporters many months ago. FAS USDA mentioned, Egypt, the world’s largest wheat buyer, has recently pivoted from primarily purchasing Russian wheat in its government tenders to sourcing mostly European wheat due to the better price. That was a signal for bearish market. And it’s really bearish. But both Russia and Ukraine almost sold out. The US exports are strong too: Global imports are raised for Algeria (+0.4 MMT to 7.4 MMT), Morocco (+0.5 MTM to 3.5 MMT), and the Philippines (+0.5 MMT to 6.3 MMT) while decreased for Bangladesh (-0.5 MMT to 5.5 MMT on larger rice crop), the EU, Mexico, and Venezuela.

Black Sea wheat export was left unchanged – 37 MMT for Russia, 16.5 MMT for Ukraine and 8.5 MMT for Kazakhstan, even in spite of some production changes. Russian wheat export expected from 33.6 MMT to 37 MMT – it’s a huge field to manipulate prices in the next few month. In this case wary interesting is future season Russian crop, which expected not record but higher than 2018/19 TY – from 74 MMT to 78 MMT.

But the most interesting news for today is early spring harvesting in Black Sea as per weather condition. The total area was 22.5 thousand hectares, or 1% of the planned 7.2 million hectares. According to the Ministry, farmers sowed 11.6 thousand hectares of spring barley, 10.4 thousand hectares of peas, 0.3 thousand hectares of wheat and 0.2 thousand hectares of oats.

In addition, the country continues to feed winter crops for grain: the area was 3.8 million hectares, or 50% of the planned. Experts fed winter wheat (3.1 million hectares), rye (25.6 thousand hectares), barley (606.5 thousand hectares), and rapeseed (967.9 thousand hectares). In Russia according AgMin the area under the harvest of the coming year will be 80.5 million hectares, which is 1.3 million hectares, or 1.6%, more than in 2018.