USDA reports from Fri, 28.06.2013
Even tighter follow-on supply for alternative commodities - even higher harvest areas for the new crop - market participants surprised.
Hardly anyone had expected this. The US grain harvest, which was the focus of global market interest and accounted for more than 50% of the increase in the 2013/14 global harvest, was readjusted by the US Department of Agriculture.
The recording of grain stocks as at June 1, 2013 revealed significantly lower stocks than previously assumed. Corn stocks were around 12% lower than in the same month of the previous year, while wheat stocks were found to be -3% lower. Stocks on the farms themselves tended to be lower than in the downstream marketing stages.
The market prices responded promptly with rising trends for alternative goods in all forward dates. Corn prices for July and August rose. Wheat saw comparatively little upward movement.
The 2013/14 cultivation report published at the same time was completely at odds with the expectations of market participants. In view of the weather-related sowing difficulties, it was generally assumed that maize acreage would be around 2% lower. However, the USDA estimates an area that is even higher than originally planned. The total wheat area was also increased. The reason for this is said to be the high efficiency of tillage technology, which is now capable of handling considerably larger units in a short space of time than was the case in previous years.
This means that the USA is expecting its largest harvest, which would be sufficient to more than double the significantly reduced stocks. The expected increase in stocks is a sufficient signal to lower corn prices in the later dates of 2013 by up to 25% compared to the July date. In the case of wheat prices, a stable trend can be observed on the stock exchanges. This is due to the weak US wheat harvest, which is 20% lower than average results from previous years.
However, there are voices questioning the data. They point to very different regional conditions. It is argued that only the August estimate will provide significantly more reliable results. Corrections would then be made not only directly to the harvested areas (instead of cultivated areas) but also to the yields per hectare.
