Domestic and global demand for U.S. agricultural commodities is lackluster
USDA March 8th WASDE: Bearish Wheat/Corn/Rice; Neutral Soy, Cotton
The March WASDE was generally unfriendly to neutral for the U.S grains and oilseed complex as the demand was lowered and carryouts were raised.
Corn: Bearish Carryout raised by 100 MBU to 1.835 BBU as ethanol and export demand are lowered. See FBN’s Weekly Newsletter from 3/9/2019 for our analysis on USDA’s treatment of ethanol.
Wheat: Bearish Carryout raised by 45 MBU to 1.055 BBU as export demand was lowered. HRS carryout raised by 27 MBU to 289 MBU on slower export demand.
Soybeans: Neutral Carryout lowered by 10 MBU to 900 MBU on increased crush.
Cotton: Neutral No changes made.
Rice: Bearish Carryout raised by 2.5 MCWT as imports are raised and exports are lowered.
What it means for U.S. Farmers: For the most part the March WASDE was a “non-event” as it underlined what the market already knows: domestic and global demand for U.S. agricultural commodities is lackluster. Corn and wheat were clearly the most bearish reports as the global demand structure continues to favor other origins. FBN has been communicating the downside risks associated with each of the balance sheets over the past months. Continue to monitor FBN’s analysis of the U.S. and global agricultural commodity markets for future market guidance and insights.
Export Sales Announcement
Private exporters reported to the U.S. Department of Agriculture export sales of 926,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.
Egypt Looking To Diversify Wheat Supply Chain
Egypt’s Supply Minister was discussing the country’s desire to diversify the origins of its wheat imports.
Egypt, is the world's largest importer of wheat, consumes 16-18 MMT of wheat on an annual basis. The Egyptian government imports approximately 7 MMT annually to support the national bread subsidy program.
The Egyptian ministry would like to increase its “cooperation” with global grain merchants to create more "realistic" specifications for wheat imports.
What it means for U.S. Farmers: Egypt is notorious for rejecting the occasional ship load of wheat due to some phytosanitary issue. This announcement by the Egyptian government could be beneficial to the U.S. wheat producer if global prices start to favor U.S. origins. However the language used seems to suggest that creating more “realistic” import specifications could translate toward enhanced import volume from the black sea countries like Romania, Russia and Ukraine if some phytosanitary certifications are relaxed. Such a development would be bearish the U.S. wheat export program as U.S. wheat remains the residual supplier to the world.
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