US wheat fell yesterday following the negative impact of Friday's bearish USDA report. The USDA was expected to reduce global wheat production significantly in light of numerous downgrades from other regions over recent weeks. In the end, global wheat production was revised on Friday evening but only down by 6.6 million mt. Australia and Canada were unchanged, whilst Europe was cut by 7.5 million mt. This is light compared to other estimates. Meanwhile, corn ending stocks were increased by 6.5 million mt, mainly due to a projected increase in the US. The weather forecast this week shows heat and dryness continuing in the Northern Plains, and Canada saw near record temperatures over the weekend. The US crop report yesterday showed corn ratings down another point to 70% 'good to excellent'. Spring wheat rating rose a point to 75% 'good to excellent', with 35% of the spring crop and 94% of the winter crop now in.
The weather in Australia has a few light showers in the forecast but overall remains very dry for the rest on the month. The USDA left Australian wheat production unchanged at 22 million mt, which is hard to agree with when drought conditions in Australia are hailed as some of the worst on record and every other crop estimate is below 20 million mt with most hovering around the 18 million mt mark.
Matif wheat closed lower yesterday pulled down by falling US markets, despite the euro making 13-month lows. EU wheat exports are lagging, as of the 12th August the EU had shipped 1.3 million mt wheat down from 2.3 million mt at the same time the last year. The Russian Rouble has fallen, meaning that Russia exports have become cheaper. Harvest in the Ukraine is 98% complete and a 9% drop in yield gives them an output of 24.4 million mt, in line with USDA numbers.
London wheat fell sharply to start the week with Nov '18 closing £5.75/t lower yesterday at £186.50/t. This morning's trade is more settled but the negative tone continues. UK prices may have experienced some correction in light of active import trade over the past few weeks and the fact that yields are not disappointing across the board. There are certainly some light land situations that have seen significant yield dips of up to 3t/ha but this is the exception not the norm.