WASDE: Wheat markets bounce despite higher ending stocks

Wheat futures briefly rallied following the USDA’s monthly supply and demand forecasts, despite US and global numbers showing even greater ending stocks than the market had apparently predicted.

US ending stocks had a further 30 million bushels added to take this year’s forecast to 1.064 billion bushels, even higher than even the most bearish analyst poll had forecast prior to the report’s release.

The market – which had been trading down over the course of the day – found some positives in the results as front month Chicago SRW traded up 1.7% in the five minutes following the release, while HRW was up 1.3%.

The USDA expects lower feed and residual use of this year’s wheat crop to peg domestic consumption back to 1.087 billion bushels, with wheat displaced by higher corn consumption in the domestic animal feed market.

HRW saw the biggest ending stock increase as it was raised 35 million bushels to 545 million bushels, while SRW was decreased 3 million bushels to 225 million bushels.

Exports, which have outperformed expectations from earlier in the year following a slow start, were kept unchanged at 925 million bushels.

Around the world

Global ending stocks came in above even the highest industry estimates published in a Reuters poll late last week at 271.22 million mt, a new record for global carryover according to the USDA.

Up 0.9% from last month, the ending stock figure compared to an average analyst guess of 268.16 million mt, with a revised assessment of global supply the primary driver of the higher figure.

“The increase in global supplies still exceeds the additional consumption as 2017/18 global ending stocks are 2.3 million mt higher this month,” the USDA said.

Around the world, Russia’s strong campaign was reflected in the numbers as an additional 1 million mt was added to its export figure to take it to 38.5 million mt, with the USDA noting the number “surpasses last year’s record exports by more than 10 million.”

Its ending stocks were decreased 1.1 million mt to 12.72 million mt.

The EU had another 1 million mt cut from its exports, dropping to 24 million mt, with the USDA noting that “Russia continues to displace the EU and other exporters in several markets.”

The EU’s end stocks dropped 1.15 million mt to 12.97 million mt, as an additional 2.15 million mt of domestic consumption was found – 1.5 million mt of which is expected to come from the feed sector.