Fundamentally Speaking

Similar to what we saw last month, grain and oilseed markets had a belated negative reaction to the March USDA WASDE report that made no changes whatsoever for U.S. corn, wheat and soybean ending stocks for this year.

Markets actually held in rather well the day of the report but like the day after the February WASDE saw a lot of red the day after the March WASDE figures were released.

Just focusing in on wheat, while global stocks were down, that was based on increased Chinese wheat feeding projections but what got our interest was a big bump in Australia's wheat production and exports and also a Canadian export estimate that was also revised higher.

This brings into question whether the USDA's current 2020/21 U.S wheat export projection is overstated in light of this new information and especially with sales lagging in recent weeks.

This chart shows the end of February U.S. wheat export sales and shipments in million bushels on the right-hand axis and as percent of the USDA's March WASDE projection which was unchanged at 985 million bushels (mb).

With three months to go until the end of the marketing year May 31, 2021, U.S. wheat sales as indicated by the last weekly export sales report was 874.1 mb and shipments were 647.7 mb, 88.7% and 65.7% respectively of that WASDE estimate.

Since 2000, the end of February export sales have averaged 86.1% of the March WASDE projection and shipments 68.4% so this year's sales pace is slightly above average but shipments below average.

The number in yellow boxes is the change in wheat exports from USDA's March projection to the final figure in mb and really there is often not a whole lot of change from the March WASDE to the final figure ranging since 2000 a drop of 38 mb in the 2000/01 season when shipments at this point in the year were 64.5%, to a 54 mb increase in 2009/10 when shipments were 69.5%.

We could see this year's projection reduced perhaps by 25 mb for in addition to greater Canadian and Australian supplies, we sense that Russia and Ukraine looking at improving conditions for their winter crop and howls from their wheat farmers may keep exporting wheat despite talk that each may spend further overseas sales in order to conserve supplies for domestic needs.

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