September 15, 2020

September USDA WASDE Highlights

September USDA WASDE Overview
Following the storms in the US and production concerns prior to harvest, this September USDA WASDE is an essential benchmark for how global markets trade.

The much-awaited September USDA WASDE has confirmed views that up to 10MT of US corn production has been lost following the storms and prolonged dry period. At 378.47MT, the USDA reduced production by 9.61MT, consumption has also been reduced following the continued depressed ethanol market, with consumption down 5.09MT. With a continued depressed US ethanol market, attention will now focus on demand.

The September WASDE has proved to be conservative in estimates for Russian wheat production, maintaining an estimate of 78MT, while CRM AgriCommodities maintain a view that production will be close to 81MT, with further USDA increases likely in October. The approach for Australia and Argentina however is now more in line with market expectations, upping the Australian production estimates to 28.5MT, although below the Australian organisation ABARES estimate of 28.9MT. Argentina has been cut to 19.5MT, inline with our expectation following the dry period and frost damage.

US soybean production has proved to be more resilient than corn, with the USDA trimming production by 3.04MT and maintaining exports at 57.83MT. The maintaining of exports is important in the context of recent rapid sales to China, quicker sales do not necessarily mean overall increased demand. Estimates for Brazil have also been increased to 133MT, as profitability in South America has incentivised an increased area.

September 15, 2020