The USDA's May WASDE report is always deemed pivotal by the market.
Heightened expectations for ethanol consumption
Beginning with corn, the USDA made a larger-than-anticipated reduction of 2.5 million metric tons (Mt) in its estimate for US corn stocks by the end of this season, in August. This downward revision reflects heightened expectations for ethanol consumption and exports. Coupled with a slightly smaller-than-expected forecast for the US corn harvest at 377.5Mt, down 12.2Mt from the previous year, the estimate for corn inventories at the close of 2024/25 came in at 53.4Mt, 2.7Mt below investor forecasts, notes a report from CRM Agri.
Furthermore, adjustments were made to the estimates for 2023/24 corn output in Argentina and Brazil, as well as Ukraine's 2024/25 crop forecast, which is anticipated to shrink by 4.0Mt to 27.0Mt. Consequently, the estimate for global corn stocks by the end of 2024/25 stood at 312.3Mt, 5.1Mt lower than expected by investors, find the analysts.
Soybean stocks
Turning to the soybean market, the USDA has forecast that world stocks of the oilseed ending next season will be even larger than expected.
Its estimate for US stocks at the close of 2024/25, at 12.1Mt, slightly exceeded trader expectations, reflecting a marginally more abundant harvest estimate, they add. The projection for world inventories, at 128.5Mt, significantly surpassed the anticipated level of 119.4Mt, as indicated by analyst polls.
Brazil is anticipated to lead supply growth with a record harvest of 169.0Mt, up by 15.0Mt year on year. On the demand side, China's soybean imports are forecasted to increase by 4.0Mt year on year in 2024/25 to a record 109.0Mt.
Wheat inventories
Regarding US wheat stocks, the USDA expects a less significant increase than anticipated for 2024/25, reaching 20.9Mt, based on a modestly lower-than-expected harvest estimate of 50.6Mt, up by only 1.3Mt year on year. Conversely, inventories in most other major exporters, including the EU, Russia, and Ukraine, are projected to decrease due to production declines.
Additionally, SovEcon revised its Russia wheat production estimate for 2024/25 downward to 89.6Mt, a decrease of 3.2Mt year on year. EU all-wheat production is forecasted to decline by 2.2Mt to 132.0Mt, according to the CRM Agri team.
These estimates collectively contribute to a forecast for world wheat stocks of 253.6Mt at the close of next season, reducing by 4.2Mt year on year to the lowest since 2015/16, and 2.8Mt below trader expectations. Stocks held by the top seven exporters are expected to be at their smallest in 12 years, indicating a tightening in comparison to world consumption, report the UK grain market specialists.
The UK's wheat harvest for 2024/25 is estimated at 11.2Mt, down by 2.8Mt from the previous year, leading to an expected increase in imports to 3.0Mt, up from 2.6Mt this season.