Revisions of Chinese Stocks Disrupt the USDA Report
By ODA UK | Published at
Today's key factor was publication of the USDA's monthly report. In terms of oilseeds, USDA again raised U.S. soya ending stocks and global soya ending stocks for the 2018-2019 campaign despite a decline in U.S. production compared to last month.
The inventory increase was due to falling Chinese demand because of the trade war with the United States. Weak demand for U.S. supply is showing up in weekly export sales that were down again today.
Despite pressure from the soya complex and oils in the wake of prices for crude and canola, rapeseed resisted and declined moderately.
On the grains market, reading the USDA report was made difficult by significant changes in Chinese balance sheets over nearly ten years. As a result, China's 2018-2019 maize stock rose 150MT compared to the USDA's last report! As a result, global inventories go from 159.3MT last month to 307.5MT this month. Moreover, U.S. maize yields and production were revised much lower than expected. U.S. maize inventories are shrinking.
The wheat balance sheet was also affected by Chinese revisions. However, without China, the ending stock contracts slightly. Australian production was revised somewhat lower to 17.5MT (-1MT), but a more dramatic decrease was expected. Baffled by the new balance sheets, the Chicago grains market slumped slightly following the report's release.
Earlier in the day, weekly statistics for U.S. export sales grew, exceeding expectations for wheat (661KT) and ticking upward for maize compared to previous weeks (700KT). In France, September customs showed wheat exports at 1.15MT, including 650KT to non-EU countries. Algeria was the leading market for French wheat with 570KT shipped.
These factors were eclipsed by the USDA report. Euronext wheat finished the session lower while European maize closed near equilibrium.