Last week, Russia’s 12.5% wheat prices in deep-sea ports increased by $18 to $286/mt. Prices rallied supported by huge cuts to global S&D in the WASDE report.
August WASDE report was bullish. The global wheat stocks came out substantially below expectations – 279 mmt vs 288 mmt. Corn stocks were estimated at 285 mmt compared 288 mmt average trade guess.
Russian wheat crop was cut by 12.5 mmt to 72.5 mmt on the smaller winter wheat area and lower yields. That could be the biggest monthly cut for Russia. The latest public SovEcon forecast is 76.4 mmt.
Canadian crop was another market mover. Total wheat production was cut by 7.5 mmt to 24.5 mmt.
Ukrainian wheat crop increased by 3 million tons to 33 million tons (SovEcon estimate – 32.6 million tons). Corn crop was +1.5 mmt to 39 mmt (SE – 39.3 mmt).
The market was expecting smaller wheat crop numbers but definitely didn’t expect such dramatic cuts. It’s quite uncommon for USDA to revise their numbers so substantially. Is this some kind of new policy?
12.5% wheat prices in deep-sea ports rose substantially. Last week bids were in 16,500-17,000 rub/mt range compared to 14,700-15,500 rub/mt a week ago (USDRUB 73.3)
WASDE report was a shocker for global and Black Sea wheat markets reacted rapidly. However, from a fundamental point of view, we feel that the top (not necessarily seasonal) could be close, somewhere around $300/mt.
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