January’s WASDE from the USDA – The report in full and a few thoughts of my own

It has been a mixed week for the grain markets over the last seven days. Last Friday’s late release of this month’s world agricultural supply and demand estimates (WASDE) from the US Department of Agriculture has split the trading week in half; the first nervously trading with values little unchanged from the week previous, and the second trading slightly higher once the estimates had been digested.

Pre-USDA, ex-farm values for spot feed wheat were fluctuating between £203-207 depending on farm location and quality specification. Post-USDA, we have seen values for old crop wheat advance around £3/T on the futures market, with ex-farm values now equating to around £205-208/T ex-farm for spot collection. Buyer interest however remains thin, with many preferring to give the markets a little longer to decide on a more long-term direction.

As for milling wheats, values are marginally better with £230/T ex-farm back on the table for full specification soft varieties. Lower quality specifications would probably make around £6/T less, but again buyer interest is thin. Full specification group 1 varieties would make around £235/T ex-farm, whilst lower quality specifications would need to be offered.

So what did these all-important supply and demand estimates suggest? As always, the full report is available to view in full via the blog section of our website – but here are a few key notes worth mentioning.

Global wheat supplies are estimated slightly lower based on production prospects for Argentina, and a re-think over how much Russia really did produce. Global demand for the product hasn’t really altered much on last month’s estimates and whilst the situation is tight, for now it appears manageable.

Global maize corn supplies are projected almost 3M/T higher due to a better than expected growing season in South America (particularly Brazil and Paraguay). Global demand for the product however is also significantly higher (mainly for animal feeding), further tightening an already tight supply and demand situation.

Global oilseed supply and demand estimates have similarly caused a stir with improved production estimates but a higher forecast demand.

According to the figures, global oilseed production for 2012/13 is projected at a record 465.8M/T; 2.8M/T higher than last month’s estimate. South American soyabeans are predominantly responsible for the gains, with this seasons estimate now at a staggering 269.4M/T.

Brazil has become the main contributor, with a record 82.5M/T expected to be harvested over the next 4-5 months; far higher than previously expected. ‘Favourable moisture throughout the south-western growing areas’ are said to have encouraged better yields.

Argentina is set to contribute 54M/T over the next 3-4 months; slightly lower than we had previously expected. Contrary to the above, Argentina is believed to have suffered ‘excessive moisture throughout much of the central growing area, causing ‘some significant’ yield damage there.

Adding further fuel to the fire then is a higher forecast demand for the product, predominantly emanating from China. Lower prices in recent weeks (we have seen ex-farm prices dip as low as £348/T) has encouraged buyers back into the market, hence the increase in demand.

Current values for OSR, post-USDA stand around the £360 ex-farm mark – a value that might be worth considering for those of you who are either paying monthly storage costs, or have large un-priced quantities still in the shed (or both!). To see £380/T+ ex-farm again we would need to see a significant decline to this apparently record Brazilian soyabean crop, as well as a further decline to the crop in Argentina. Place your bets…


To view this month’s report in full (PDF format) please see link below:



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