USDA WASDE – August 2012

For the last two, perhaps even three weeks the grain markets have been awaiting some sort of “formal clarity” to both clear up the actual severity of the damage done to the American maize corn crop and to explain the implications this will have on global supply and demand. Friday’s USDA WASDE (the latest monthly supply and demand report from the US department of Agriculture) was set to provide this much needed “formal clarity”… But are things really any clearer?

Well, the report did indeed make significant changes to both global production forecasts and it did consequently alter both usage quantities and consumption figures. It is the market however which has not yet decided on its reaction to the report; but this is probably more to do with the fact that it has not yet had time to take in all the information and digest it in the form of a price, rather than it not providing this much needed “formal clarity”… So what changes did the report make?

Here a few of the key points…

MAIZE CORN –

The forecast US maize corn yield has been reduced a further 22.6B/A (bushels per acre) from 146B/A last month to 123.4B/A (That’s 274M/T, 55M/T down on last month’s forecast). The extreme heat and dryness which was recognised in last month’s report as a ‘potential threat’ has since developed into the worse drought since 1956 and the driest July on record across the majority of the American Plains and into the Western areas of the Corn Belt. If the crop yields as estimated, it would be the lowest yielded crop since 1995.

Global Corn consumption is projected 38.9M/T lower.

WHEAT –

US wheat supplies have been raised by 54M/B (million bushels) – internal production was forecast to be 44M/B higher and imports were also forecast higher, at 10M/B.

Global wheat supplies were however projected to be 2.1M/T lower – predominantly due to sharply reduced yield prospects for an incredibly hot and dry southern Russia. Yield losses in Turkey, Argentina and Kazakhstan also contributed to the reduction.

Global wheat consumption is raised 3.2M/T – generally to compensate for the lack of maize corn this season.

OILSEEDS –

US oilseed production is projected at 83.4M/T – down 9.4M/T from last month.

Global oilseed production is projected at 457.3M/T, down 8.5M/T from last month – hot and dry conditions across much of south-western Europe, Canada and the US were cited as responsible for the losses.

To review the report in full please see the link below:

http://www.usda.gov/oce/commodity/wasde/latest.pdf