ANALYSTS have been scrambling to interpret last week US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimate (WASDE) report.
Numbers were bearish for all commodities, headlined by record figures for the US corn crop. The report raised average US yields to a thumping 175.1 bushels an acre or just under 11 tonnes a hectare.
This leaves the prospect of the US having its highest levels of corn stocks in almost 30 years.
Predictably, immediately after the news corn futures slipped to their lowest levels in seven years. However, afterwards there was a rally off those lows as the market moved beyond the headline numbers.
Tobin Gorey, commodity analyst with the Commonwealth Bank, said increasing demand for feed grain was a positive for prices.
On the wheat front, the inverse was true. A seemingly positive WASDE report has been interpreted negatively.
Ole Houe, director of advisory and products with IKON Commodities, said headline cuts to European Union wheat production and a lowering in world stocks were more than made up for by forecast increases in Russian and Ukrainian production.
The big corn crop, at competitive prices, also weighs heavily over the wheat complex. Mr Houe said the sheer size of the corn numbers had taken some by surprise.
Peter McMeekin, origination manager at Nidera Australia, confirmed there was some skepticism surrounding the numbers.
But Mr Houe also said there had been some support for the market from the Black Sea, where prices have jumped $12/t in the past week with growers withholding grain from the market.
“This is good for the competitiveness of Australian grain into Asia,” he said.