Markets continue to trade sideways as the USDA reiterate bearish World wheat fundamentals once more.
USDA increase world wheat crop to a record 755mmt, up 1.5mmt on last season. Stocks of 268mmt also a new record.
Informa place US winter wheat plantings estimate at 31.1.m/a, down from 31.9m/a (32.7m/a last season). Of that, the HRW area is expected down 5% on last year.
AgRural suggest Brazilian corn harvest this year will reach just 84.1mmt, down from last year’s 97.6mmt (USDA Dec est. 95mmt).
Kazakhstan’s Ag Ministry cut their wheat export estimates by 1mmt for the season to 8mmt, citing increased competition from Russian exports.
Russian Ag Minister suggests wheat exports could reach up to 40mmt this season (USDA est. 33.5mmt).
France AgriMer reduce wheat export expectations to 9.5mmt, down 400k. Figure continues to appear high, with French supplies uncompetitive relative to Black Sea grain.
Egypt buys 295k wheat, largely Russian origin. Brazil and Russia have agreed terms for importing Russian wheat, though this is not believed likely given the availability of cheaper Argentine supplies.
US funds estimated net short 163.2k wheat, 237.2k corn.
Dryness in the US Southern Plains remains closely monitored, particularly for any sign of colder temperatures and the potential for winterkill. 24% of the country has received insufficient rain. Some rains are forecast for the next 2 weeks, though not to greatly above average levels.
The La Nina weather pattern, if sustained, could keep the Southern half of the US dry going forward.
Argentina forecast for some rains, though more will be required to help mitigate the recent dry period if crop losses are to be avoided.
French farm ministry place winter wheat crops condition at 95% g/e
Little supportive to be found in USDA’s report on Tuesday, with abundant supplies of wheat and corn further illustrated.
South American dryness remains cause for concern. Likewise lack of rain for the US Southern Plains and potential for winterkill will be closely monitored - particularly in light of the smaller wheat area.
In light of the size of the US fund shorts in corn/wheat and the proximity to year/month end - short covering remains a possibility over the coming weeks. Though markets may struggle to sustain any rallies, absent supportive developments.
Expect the range bound trade to continue as we move towards the festive period.