Special issue – WASDE analysis, December 2021

WHEAT

PRODUCTION

WASDE has increased its overall wheat production by 2.6 million MT (MMT) to 777.9 MMT. The main increases are from the revaluation of the Canadian crop by 0.7 MMT, to the level of 21.7 MMT. Australia, with an increase of 2.5 MMT, reaches the level of 34 MMT. The European Union has a surplus of 0.3 MMT and Russia a surplus of 1 MMT, up to a level of 75.5 MMT. Despite increases in production in Russia and Canada, their production remains below last year’s level.

CONSUMPTION

WASDE projects global consumption rising by 1.98 MMT to 789.4 MMT. This increased consumption comes from higher residual consumption in Russia and Australia. Australia, on the other hand, will generate much more feed wheat due to heavy rains that degrade quality. Exports are also estimated to increase globally by 2.3 MMT to 205.5 MMT. Iran is the main candidate, with an increase in exports of 1.5 MMT compared to last month, to the level of 7 MMT.

STOCKS

WASDE increases the global stocks level by 2.4 MMT to 278.2 MMT. The main source of the increased stocks is found in Australia, Canada and the USA. However, they remain at the lowest level in the last 5 years.

PRODUCTION – CONSUMPTION = -11.5 MMT

BEARISH REPORT

• However, adding the uncertainty due to OMICRON and the Russian quota, the wheat closes down to 382.5 USD MAR22.
• The fundamentals of the numbers remain the same as last month.
• January is expected to bring in an additional 1.5 MMT from Argentina.

DEC 2020 VS. DEC 2021: higher production, higher consumption, smaller stocks

WASDE – BLACK SEA FIGURES – WHEAT

• PRODUCTION: Russia 75.5 MMT (+1 million), Ukraine 33 MMT (0)
• EXPORT: Russia 36 MMT (0), Ukraine 24.2 MMT (+0.2 million)

CORN

PRODUCTION

WASDE generates a global increase in production by 4.08 MMT, to the level of 1,208.7 MMT. The increase estimated by WASDE comes mainly from Ukraine, with 2 MMT, up to the level of 40 MMT. The European Union is credited with an increase of 2.5 MMT from Romania, France and Poland. We find a decrease in China by 0.4 MMT due to the decrease in productivity per hectare. Let’s not forget the main characteristic of corn, namely that it is harvested with moisture and thus it can lose its quantity after the drying operation.

CONSUMPTION

WASDE increases global consumption by 3.83 MMT to 1,195.90 MMT. The increase in consumption is driven by higher industrial demand for ethanol production, as well as increased import demand from Iran, Saudi Arabia, Egypt and the United Kingdom. Exports also rose from Brazil, with a busy November.

STOCKS

WASDE raises stocks by 1.08 MMT to 305.5 MMT, with higher stocks originating in Ukraine, the EU, Mexico and Iran, offset by declining stocks in China.

PRODUCTION – CONSUMPTION + STOCKS = NEUTRAL RATIO

Euronext closed positive at +2.25 EUR 246 EUR

DEC 2020 VS. DEC 2021: on the whole line, December 2021 is advantaged

WASDE – BLACK SEA FIGURES – CORN

• PRODUCTION: Russia 15 MMT (0), Ukraine 40 MMT (+2)
• EXPORT: Russia 4.5 MMT (0), Ukraine 32.5 MMT (+1)

SOYBEANS

PRODUCTION

WASDE generates a lower overall production of 2.21 MMT, up to the level of 381.8 MMT. The main decreases are generated by China with 2.6 MMT and Paraguay with 0.5 MMT, partially offset by the increase in Canada of 0.4 MMT.

CONSUMPTION

WASDE projects global soybean consumption to fall by 1.03 MMT due to lower processing in China.

STOCKS

WASDE indicates a decrease in global stocks by 1.78 MMT to 102 MMT, mainly generated by China, where domestic stocks are declining due to lack of processing, fueled by logistical and energy-restricted problems.

PRODUCTION – CONSUMPTION + STOCKS = NEUTRAL RATIO

China is balancing production shortages by reducing processing and stocks.

DEC 2020 VS. DEC 2021: also, DEC 2021 is positive on all levels vs. DEC 2020