Wheat Market Under Pressure from Surging Supplies
The wheat market is facing mounting supply pressure following the release of the USDA's September WASDE report.
The report showed that additional supply is making it harder for the market to sustain a bullish narrative, particularly while demand remains relatively subdued.
The agency left the US balance sheet unchanged while increasing production estimates for Australia, Canada, and Ukraine. Russian exports were reduced as expected, but Australian production was particularly notable, with the crop forecast raised by 3.0mmt to 31.0mmt.
Globally, wheat ending stocks rose to 276.3mmt, while the stocks-to-use ratio among major exporters increased from a relatively tight 14% to a more comfortable 16.5%. Staying with Canada, StatsCan lowered its wheat production estimate to 36mmt, down 10% from last year.
The quality profile is becoming a growing concern due to heavy and persistent rain across the Prairies, raising questions about the quality of the crop that will ultimately be harvested.