- Oct WASDE lacks excitement/leans slightly bearish; Chinese corn imports trimmed 2 million mt; World weather patterns improving.
- USDA’s Oct report is another in a string of unexciting WASDE releases. Adjustment to US and world supply and demand largely matched trade expectations, and we suspect focus returned immediately to improving world weather forecasts. The midday GFS weather forecast maintains an expansion of Brazilian rainfall in the 6-15-day period. Better rain chances are projected across E Ukraine and S Russia next Mon-Thurs. And the GFS forecast is now in better alignment with EU and AI models in projected soaking rainfall across the Plains HRW Belt Oct 20-22. Wheat has been the bearish leader at midday amid the shedding of risk premium.
- US corn yield was raised 0.2 bushels/acre to 183.8. End stocks were cut 58 million bu to 1,999 million as lower carry-in supplies (which was known) and a 25 million bu hike in projected US exports more than offset NASS’s 17 million bu production increase. We note additional yield increases are common in November when yield is raised in both September and October. A final yield at/slightly above 184 bushels/acre is anticipated.
- Total 2024/25 supply in Argentina and Brazil were increased a combined 3.6 million mt amid larger carry-in and as old crop Brazilian exports were adjusted downward 1 million mt.
- Importantly, WASDE trimmed 2024/25 Chinese imports by 2 million mt following China’s absence from the Brazilian market in late summer/early August, and we fear additional cuts will be made to Chinese feed imports over time. Reduced imports have not provided any bullish catalyst for domestic prices, which is a concern. USDA pegs Chinese corn imports in 2024/25 at 19 million mt, but recall China’s commitment to WTO is only 7.2 million mt. The exporter corn balance sheet was left unchanged. Larger S American supplies were offset by tightening balance sheets in Ukraine, Russia, and the US.
- US soy yield was lowered a modest 0.1 bushels/acre to 53.1. Production was trimmed 4 million bu. End stocks were untouched at 50 million bu. It is too early to adjust US 2024/25 US soy exports, but we view USDA’s annual export demand growth of 155 million bu (9%) as high without S American yield loss and an extension of the US export program beyond early spring. China’s 2024/25 soy imports are unchanged at 109 million mt, vs. 112 million mt in 2023/24. China’s weak economic performance is a concern in the world of ag. World soy end stocks were near unchanged at a record 134.7 million mt.
- US wheat ending stocks were lowered 16 million bu to 812 million, but this too was expected following NASS stocks/seeding data on Sep 30.
- US wheat carry-in was lowered 6 million. Feed use in 2024/25 was raised 10 million. No change was made to export disappearance.
- Russian wheat production was cut 0.5 million mt to 82.5. EU production was lowered a full 1 million mt. Ukrainian output was raised 0.6 million mt. World wheat trade in 2024/25 was lowered 0.7 million mt, which is broadly aligned with exporter shipment pace analysis through late September. World and exporter wheat balance sheets were very little changed. The world wheat market is not oversupplied, and we maintain the USDA is a bit too low with its US export forecast, but USDA’s Oct WASDE was lacking in bullish fodder. World wheat stocks were increased 0.5 million mt.
- The midday GFS weather forecast is much wetter in an area nearly perfectly outlining the US HRW Belt, with accumulation of 2-4+” projected Oct 20-22. Confidence in details so far out is low, but the addition of rain into the western US ag belt has been a consistent feature of model guidance in the last 24 hours.
- The lack of a major global demand driver places the burden of rallies onto new supply threats. Dec Chicago corn and Jan beans have fallen below their respective 20-day moving averages, with next support pegged at $4.01-4.07, Dec corn, and $10.13-10.15, Jan beans. Longer term downside risk favours the soy complex.
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