Frontrunner - 12th November 2021

The United States Department of Agriculture (USDA) published its November World Agricultural Supply and Demands Estimate (WASDE) report early this week, bringing an end to a short spell of declining prices. A revised estimate for world wheat stocks was released, which was below average trade estimates. The USDA cut world wheat stocks from 277.18 million tonnes to 275.80 million tonnes. This revision changed the negative market sentiment. The profit-taking that was seen from the middle of last week reverted to bullish enthusiasm.

Overall, changes for the wheat balance sheet were modest and few but worth noting. The USDA reflected increasing import needs and revised its exports estimate upwards to 203.16 million tonnes from a previous figure of 199.63 million tonnes. The increase in the exports total was aided by an additional one million tonnes exported from Russia, from 35 million tonnes to 36 million tonnes. However, this is in contrast to the figures released by Russian analyst group SovEcon, which has cut its own Russian wheat export estimate to 34 million tonnes to account for the impact of export taxes.

SovEcon noted more demand from the EU, increasing its European demand estimate from 35.5 million tonnes to 36.5 million tonnes. This is well ahead of other estimates and leaves an untenable ending stock which is too low to meet domestic demand strategic needs.

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