WASDE: Wheat tweak see 3 million mt more end stocks globally

8 Mar 2018 | Tom Houghton

Minor adjustments to the USDA’s supply and demand estimates saw higher ending stocks around the world as almost 3 million mt was added to take the figure to 268.9 million mt, above the market’s expectation of 265.6 million mt.

Most had been braced for a bearish report throughout the day, as Chicago traded down 7 cents from its open at one point, before coalescing around 1.25 cents on the front month SRW contract in the immediate aftermath of the release.

Front month HRW was down 7.25 at its low, before trading around 2 cents off its open in the aftermath of the release at 1700 in London.

At a global level, production for the 2017/18 marketing year was increased by half a million tonnes to 758.79 million on the back of higher output from Kazakhstan which was raised to 14.8 million mt.

As expected, the slower pace of sales seen in the US this marketing year is set to keep 680,000 mt more wheat in reserve this year.

The balance of the USDA’s reduction was found around the world, with the EU bearing the brunt of high global supply.

The EU’s foreign sales were reduced by 1 million mt to 25 million mt as a strong euro and more competitive origins have kept it off the international market this year.

According to the USDA, that lost million mt of market share found its way straight onto the ending stocks, with intra-EU demand apparently insufficient to absorb any of the surplus.

Elsewhere, Russia’s fast pace of sales saw the USDA add 1.5 million mt, taking its forecast to 37.5 million mt, while 200,000 mt was added to Ukraine to take its exports to 17.2 million mt.

Turkey was set to be the biggest buyer of this excess, with thawing relations between Ankara and Moscow set to see an additional million mt flow from Russia to Turkey.

Other notable changes included India, where 2 million mt was moved from the consumption column to ending stocks, with rising domestic prices pointed to as reducing demand.