FORT COLLINS, Colo. – Monthly reports from the US Department of Agriculture are normally the main event for grain traders on the day of issue, but war in Ukraine and volatile wheat and oil prices put the agency’s numbers on the back burner on Wednesday.
Market participants have been trying to figure out what the loss of grain exports out of Ukraine and Russia will mean in the short- and long-term, and it was uncertain what USDA would do with those numbers this month, if anything.
USDA cut 12 percent or 7 million tons total from Ukraine and Russia wheat exports in the current 2021-22 year, reducing their combined export share to a still massive 26 percent from 29 percent. Most of those losses went into the countries’ respective stocks.
Stocks-to-use among global wheat exporters had been set for an all-time low of 12.7 percent, but the Black Sea adjustments put that supply-versus-demand ratio at 14 percent.
That is down from last year’s 15 percent and the second-lowest all-time after 13 percent in 2007-08, the last time wheat prices were as high as current levels.
India and Australia picked up some of those lost exports, but overall global exports were pegged down from last month. However, they are still above the predictions from a few months ago when grain prices were near recent minimums, demonstrating how steep prices have not exactly killed off demand, particularly versus initial expectations.
USDA took Ukraine corn exports down by 6 million tons (18 percent) and added nearly 2 million worth of business to the United States, but shipment predictions for Argentina and Brazil were left unchanged.
US corn export sales for 2021-22 are not necessarily behind the needed pace for the export bump, but they cannot falter in the coming months and could use a boost. They have been a bit lighter than normal in recent weeks, which may not be too bad considering the high prices.
USDA’s global 2021-22 corn stocks-to-use was unchanged from last month in Wednesday’s update, still at eight-year lows and down slightly from last year. However, that same ratio for soybeans shrank a bit further, keeping both the projection for eight-year lows and the pressure on the upcoming US crop.
That is despite a huge demand reduction from top buyer China, which USDA sees importing 94 million tons of soybeans this year versus 97 million last month and 100 million in January. The agency’s Brazil crop peg landed below trade ideas at 127 million tons versus 134 million in February and 139 million in January. — Reuters
