The September United States Department of Agriculture monthly report had to absorb several changes to the numbers that had already been flagged to the market. These included upgrades to the estimate for the Australian crop, and increased stock levels in Canada, among others.
Leading into the report prices had already taken some of these moves into account, limiting the eventual price reactions once the data was published. This was particularly so for corn and soybeans, where production increases had already seen prices decline ahead of the report.
For wheat, the increased stocks in Canada and the lift in Australian production were also already in the market before the report, but there was still enough negative news to extend recent price declines a little further.
For wheat, the report can be summarised as saying increased supplies, increased consumption and higher ending stocks. The biggest move came from increased stock estimates for Canada, the European Union and India. In all cases opening stocks were increased, with 1.88 million tonnes added for Canada, 1mt for the EU, and 700,000 tonnes for India.
On top of that, production increases for Australia (1.5mt to 31.5mt), India (1.5mt to a new record 109.5mt) and China (up 900,000t) outweighed declines for Canada and Argentina (1.5mt in total).
With global opening stocks increasing by 3.73mt, and production up by 3.37mt, global supplies are up 7.1mt compared to the numbers published by the USDA in August.
A lift in consumption of 2.96mt has limited the impact of the increased supply, but global ending stocks were still revised up by 4.16mt. However, there is still a 9.34mt year on year decline in overall global wheat stocks.
When we exclude China from the data, global ending stocks have been revised up by 4.76mt, but the year on year decline is 6.25mt.
The two measures of global wheat stocks, showing year on year declines, will be supportive of wheat prices for the remainder of the 2021/22 season.
Also supportive from this month's report, is another pull back in projected US ending wheat stocks. The monthly revision saw 320,000t removed from the estimates, to increase the projected decline in US wheat stocks to 6.24mt.
On a more cautious note, though, if global stocks outside of China are down by 4.76mt, and US stocks are down by 6.24mt, it implies that stocks elsewhere are increasing by 1.48mt year on year. India will account for most of this, despite an expectation that exports from India will increase by 1mt this year.
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