USDA Raises Corn Forecasts Amid Heavy Supplies
The October World Agricultural Supply and Demand Estimates (WASDE) report released by the US Department of Agriculture indicated heavy corn supplies in the United States, complicating global wheat supply dynamics. The agency raised its US corn yield estimate to approximately 11.4 tonnes per hectare, an increase from the previous 11.2 tonnes per hectare. This adjustment pushed the forecast for total US corn production to roughly 407 million tonnes.
Projected US corn ending stocks jumped to almost 47 million tonnes, representing an increase of approximately 7 million tonnes over the September estimate. The USDA raised expected feed use, ethanol demand, and exports for US corn; however, these increases were not sufficient to absorb the additional supply.
Consequently, global corn ending stocks were raised to 280.4 million tonnes, a figure largely driven by higher US supplies. This increase offset production cuts in Europe, which included a poor crop harvest in France. Despite the heavier supply outlook, market prices reflected the shift. Chicago corn futures fell around 3 percent over the week to A$274 per metric tonne and were 6 percent lower over the month.
Black Sea Logistics Reduce Russian Wheat Trade
While corn supplies expanded, global wheat production was barely changed at 822.4 million tonnes. However, the USDA cut world wheat trade by almost 3 million tonnes to 209 million tonnes. Russia drove most of this reduction in wheat trade, with the USDA dropping its Russian wheat export forecast from 43 million tonnes to 40 million tonnes. This figure marks the lowest export forecast for Russia in five years, attributed to logistical problems in the Black Sea region.
Independent forecasts aligned with the USDA's assessment of reduced Russian shipments. The Moscow-based analytical firm IKAR cut its Russian grain crop forecast to 137 million tonnes, which includes 88 million tonnes of wheat, and reduced expected wheat exports to 42 million tonnes from 43.5 million tonnes. Both the USDA and IKAR forecasts suggest that Russia will likely ship less wheat than previously expected.
Despite the deterioration in Russian export prospects, the market remains comfortable with broader global wheat availability. This sentiment was reflected in price movements across major hubs. Chicago wheat fell 2 percent to A$355 per metric tonne, while Kansas dropped 3 percent to A$378 per metric tonne. French wheat eased 1 percent to A$390 per metric tonne, and ASX wheat fell 2 percent to A$352 per metric tonne.
Australian Physical Markets Show Mixed Signals
In contrast to the broader global trends, Australian physical markets displayed mixed performance across different commodities. Brisbane APW1 held around A$414 per metric tonne, while Newcastle was unchanged at A$395 per metric tonne. Adelaide APW1 gained 3 percent to A$316 per metric tonne.
Canola prices were also uneven, with Newcastle up 5 percent to A$806 per metric tonne while Brisbane eased 3 percent to A$771 per metric tonne. In the pulse sector, Brisbane chickpea values rose another 2 percent to A$920 per metric tonne, taking the monthly gain to 31 percent and the year-on-year increase to 70 percent.
Fertilizer Costs Ease on Global Supply
Urea prices provided some relief to input costs, with Australian urea falling 3 percent to A$808 per metric tonne. This decline followed a sharp fall in international nitrogen prices after India's latest import tender produced the lowest urea offers in around two years.
Rising Chinese supply and soft demand are currently pressuring global nitrogen prices, with Chinese supply expected to limit urea upside in coming months. The market dynamics remain complex, with corn supply driving the market in one direction due to high availability, while wheat carries a Black Sea risk premium, and fertilizer offers some relief.