The Good: The USDA report came in as expected with only some minor tinkering with the wheat exports. The net impact was to reduce wheat stocks by 10 million bushels to 862 million bushels. This is not leading to significantly tighter supplies like we are seeing in the oilseed markets, but this is still constructive for the U.S. wheat situation. No changes were made to the spring wheat situation, but we managed to rally seven cents. This makes wheat the good news story of the day.
The Bad: WASDE was expected to be bullish for oilseeds and I would argue that the report delivered in spades. MarketsFarm expected increased in exports and domestic crush that would reduce the projected ending stocks. Exports weren’t changed, despite over 2.69 million tonnes of exports last week, but the crush jumped by 15 million bushels. This dropped the ending stocks to 175 million bushels. Unfortunately the trade was expecting even lower ending stocks of 168 million bushels, which caused soybean and canola markets to drop on the day.
The Ugly: Buried deep in the report was an increase in the global vegetable oil ending stocks. The increase in the nine major oilseed ending stocks was 1.14 million tonnes to total 20.1 million tonnes. The increases were mostly in the soybean and palm oil ending stocks projections. Despite the increase this month, the year on year drop of 2.67 million tonnes. This is the lowest stock levels of global oilseeds since the 1990’s. On a stocks to use basis, this is the lowest level since the late 1970’s.