Corn and wheat futures pared losses after the US officials issued lower-than-expected estimates for domestic inventories of the grains at the end of the season, counting on more feed use than many investors have forecast.
Forecasts for rain in the drought-hit US Plains, coupled with disappointing weekly US export sales data, saw Chicago wheat futures fall 2.4% ahead of the report, weighing on corn, which dropped 1.1%.
However, wheat had pared its losses to 0.2% half an hour after the US Department of Agriculture, in its monthly Wasde world crop report, trimmed its forecast for domestic inventories of the grain at the end of this season by 7m bushels to 684m bushels – a small downgrade, but one unexpected by traders.
Corn futures returning briefly to positive territory, after the Wasde estimated US carryout stocks for 2014-15 at 1.83bn bushels.
While a gain of 50m bushels, the upgrade was smaller than investors had expected.
‘Continued strong competition’
The revisions in both cases reflected higher estimates for feed use than many investors had expected, with the figure for wheat nudged higher by 10m bushels to 160m bushels, reflecting the outcome of stocks data released last week.
Wasde estimates for US crop stocks, end 2014-15, change on previous, and (on market forecasts)
Corn: 1.827bn bushels, +50m bushels, (-27m bushels)
Soybeans: 370m bushels, -15m bushels, (in line)
Wheat: 684m bushels, -7m bushels, (-8m bushels)
Sources: USDA, Agrimoney.com, Reuters
The upgrade helped take the sting out of a downgrade to the estimate for US wheat exports, which the USDA attributed to “continued strong competition in global markets”.
US wheat exports are now seen falling 15.2% to 880m bushels this season, within an ace of a 12-year low.
Nonetheless, the department nudged higher to $6.00-6.10 per bushel, from $5.90-6.10 per bushel, the forecast farmgate price that US growers will receive for their wheat this season.
For corn, while the USDA lowered its estimate for domestic feed use of the grain in 2014-15 by 50m bushels to 5.25bn bushels, reversing an upgrade made last month, many commentators had expected a bigger revision after data last week showed bigger-than-expected stocks as of March 1.
Wasde estimates, world crop stocks end 2014-15, change on previous, and (on market forecasts)
Corn: 188.46m tonnes, +3.18m tonnes, (1.55m tonnes)
Soybeans: 89.55m tonnes, +20,000 tonnes, (+20,000 tonnes)
Wheat: 197.21m tonnes, -500,000 tonnes, (-300,000 tonnes)
Sources: USDA, Agrimoney.com, Reuters
However, any upbeat sentiment for the domestic balance sheet was countered by a bigger-than-expected, 3.2m-tonne upgrade to the estimate for world corn stocks to a 15-year high, reflecting upgrades to figures also for Indonesian and Chinese inventories.
For soybeans, meanwhile, the USDA lowered its estimate for domestic stocks at the close of 2015-16 by 15m bushels to 370m bushels – bang in line with market estimates, and again reflecting findings of last week’s stocks report, besides a nod to the huge US sowings expected this year too.
“Seed use is raised in line with the record plantings” signalled by official data last week, the USDA said.
Soybean order cancellations
The USDA also raised its estimate for the Argentine harvest by 1.0m tonnes to 57.0m tonnes, “on higher yields resulting from favourable rainfall and mild temperatures across much of the growing region”, although the upgrade was largely offset by a 700,000-tonne downgrade to Indian output.
Wasde estimates, South American crops 2014-15, change on previous, and (on market forecasts)
Argentine corn: 24.0m tonnes, +500,000 tonnes, (+100,000 tonnes)
Argentine soybeans: 57.0m tonnes, +1.0m tonnes, (-230,000 tonnes)
Brazilian corn: 75.0m tonnes, unchanged, (+180,000 tonnes)
Brazilian soybeans: 94.5m tonnes, unchanged, (+320,000 tonnes)
The Indian crop has shown “below-average yields resulting from an unusually short monsoon season”, the USDA said.
However, with the US, and world, soybean data in line with market expectations, soybean prices were little-moved by the Wasde, and stood down 1.5% at $9.56 ј a bushel in Chicago, May basis, an hour after the report.
Soybean futures were sent lower by data earlier showing net cancellations of 176,700 tonnes in US export sales of the oilseed for 2014-15, including a net decrease of 229,400 tonnes in sales to China, the top importer.
The data follow mounting talk of Chinese buyers delaying or cancelling orders from Brazil.
(Source – http://www.blackseagrain.net/novosti/grain-futures-pare-losses-on-lower-than-expected-us-stock)