Dec-17-USDA estimate for the global grain market slightly higher - wheat prices fall In its latest monthly report, the US Department of Agriculture (USDA) estimates that global grain production will increase again to a total of 2,079 million tons. With a slightly lower harvested area of 541 million hectares, the average yield of 3.8 tons per hectare will determine the final result. The wheat sector makes a significant contribution to the higher estimate with around +3 million tons more than in the previous month, while maize production is estimated to be around +1 million tons higher. On the consumption side, the USDA is forecasting 2,096 million tons, which is 3.5 million tons more than in the previous month. The main increase in consumption is in wheat at +2 million tons. Ending stocks increased to around 501 million tons. This corresponds to around 23.9% of consumption. The long-term average is around 22%. This means that the global grain market remains well supplied above average, even if the higher levels of the previous year are no longer achieved. The USDA estimates the global wheat harvest at 755 million tons, just under 1.5 million tons more than in the previous year. With global consumption at 742 million tons, final wheat stocks will increase to an unprecedented 268 million tons or 36% of consumption. The multi-year average is around 28%. At first glance, the wheat market would therefore appear to be well supplied, well above average. However, if the Chinese stocks of around 128 million tons that are not available worldwide are deducted, a supply figure of 22.3% remains, which is around 1 percentage point higher than the two previous year's figures. This puts the supply situation in the wheat sector into perspective. However, the Russian influence on the wheat market remains dominant. Russia's far above-average harvest of 83 million tons will be exported in the amount of 33.5 million tons. However, at just under 17 million tons, the surplus stocks remain more than three times as large as three years ago. The EU wheat harvest was estimated at 152.5 million tons. This is around 7 million tons more than in the weak year of 2016. EU exports are estimated at 28.5 million tons, around 6 million tons less than two years ago. Russian competitors are much more favorably priced. Despite a far below-average US wheat harvest of only 47 million tons, ending stocks have risen to 26 million tons, i.e. more than 55% of the US wheat harvest is in storage. This is reason enough for the Chicago Stock Exchange to send wheat prices plummeting. Prices for the front month of March 2018 have fallen to $4.1 per bu or €12.89/dt. At the beginning of Dec, prices were still at €13.66/dt. In the maize sector, the changes in the USDA estimate are limited. Only in the EU and China were harvest volumes increased by 0.5 million tons each. With a slight increase in consumption, final stocks remained almost the same at 204 million tons. Falling surplus stocks are predicted in the USA. The reactions on the stock markets are correspondingly positive. The downward trend to date appears to have stabilized, with prices at least showing a slight upward trend.
