(Agrimoney) – Corn, wheat and soybean futures fell after US officials pegged world stocks of all three crops at levels above those that investors had expected, despite seeing domestic supplies rising less strongly than had been expected.
Soybean futures for January hit an intraday low of $10.30 ¼ a bushel in Chicago, down 1.2% on the day, and some $0.12 a bushel below where it stood before the US Department of Agriculture forecasts were released.
Corn for March dropped 1.5% to $3.89 ¼ a bushel, also well below levels futures were trading at ahead of the data, while wheat for March touched $5.75 ½ a bushel, a loss of 1.8%.
The price declines followed the release by the USDA of its monthly Wasde report which, while proving moderately upbeat in changes for domestic balance sheets, estimated world inventories at levels above those investors had expected.
Oilseeds upgrade
For soybeans, the estimate for world inventories at 89.9m tonnes at the close of 2014-15 was only some 170,000 tonnes more than investors had forecast.
However, the estimate for overall oilseed inventories was upgraded by 1.1m tonnes to 104.1m tonnes, reflecting an increased idea of the Canadian canola harvest, following official data last week.
“Global rapeseed production is projected at a record 71.9m tonnes, up 1.2m tonnes, mainly on increased production for Canada, which is estimated at 15.6m tonnes,” the USDA said.
On oilseed inventories, “increased rapeseed stocks in Canada and higher soybean stocks in Brazil and Argentina are only partly offset with lower soybean stocks in the US”.
‘Increased competition’
For corn, world inventories were seen ending the season at 192.5m tonnes, an unexpected upgrade of 0.7m tonnes from last month’s figure, and down to higher estimates for stocks in China and Mexico.
Indeed, China’s corn crop was upgraded by 1.5m tonnes to 215.5m tonnes – and imports downgraded by 500,000 tonnes to a four-year low of 2.0m tonnes.
On wheat, the USDA lifted its forecast for global end-of-season stocks by 2.0m tonnes to 194.9m tonnes, down to increased expectations for inventories in the European Union, as a bumper corn harvest means some displacement in wheat feeding, in Russia, and in Canada, where the production number was upgraded by 1.8m tonnes.
A 500,000-tonne downgrade to 22.0m tonnes in the forecast for Russian wheat shipments was put down to “increased competition” in export markets, “particularly from the EU”, rather than any assumption of a squeeze by officials on trade, as had been muted over the past week.
‘Record export pace’
The data took the shine off USDA revisions to domestic balance sheets which indicated, for corn and soybeans, tighter supplies than the market had pencilled in.
The estimate for domestic soybean stocks was cut by 40m bushels to 410m bushels, nearly twice as much as investors had expected, thanks to an increased export forecast.
The USDA said: “Soybean exports are increased…. reflecting the record pace in recent weeks and prospects for additional sales and shipments ahead of the South American harvest,” which will likely be delayed after a slow seeding season.
The forecast for US corn inventories was downgraded by 10m bushels to 1.998bn bushels, rather than increased as investors had expected, thanks to an increased expectation for corn use in sweeteners.
The data also came within minutes of the US Energy Information Administration revealing that US ethanol production last week hit an all-time high of 988,000 barrels a day last week, implying record use of corn to make the biofuel.
However, the USDA left at 5.15bn its forecast for corn use in making biofuels this season.
