July’s WASDE, released on Friday, presented another bearish blow to the global grain market.
Wheat and soybean output and corn and soybean ending stocks have been revised higher.
Following the release of the report grain prices tumbled further. Consequently, corn and wheat prices have hit the lowest level since 2010.
On Friday the US Department of Agriculture released July’s World Agriculture Supply and Demand Estimates. The report struck yet another bearish blow to the global grain market as supply estimates for wheat, corn and soybean for the 2014-2015 market year were revised up.
World wheat production has been revised up by 3.6mt, which erases most of the previous projected decline in world output in the 2014-2015 market year. However, projected ending stocks have been left unchanged. Corn output has been revised down by 0.2mt. Despite the slight revision world corn production is projected to stay close to the record-high level of the 2013-2014 market year. Corn ending stocks have been revised up by 5.4mt on the back of, among other things, weaker projected consumption.
Finally, the projected record-high soybean production in the 2014-2015 market year has been revised up by an additional 4.8mt. However, projected consumption has also been revised up by around 2.7mt mainly on the back of higher expected Chinese demand. Consequently, ending stocks are projected to increase around 2.4mt.
Hence, the outlook for world grain supplies remains rather benign, as the market will likely be swamped in the 2014-2015 market year. Consequently, prices have tumbled recently and corn and wheat prices have hit the lowest level since 2010.
The risk to grain prices is on the upside following the recent sharp downtrend, particularly with El Niño looming on the horizon. A strong El Niño may stir up the market but according to recent forecasts El Niño weather may approach in September and will probably be weak or moderate.
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