Market Report 16th Feb 2018


US grain markets close firmer, whilst EU markets close largely unchanged on the week, as US/SA weather continue to dominate the focus.

  • Russian 12.5% protein wheat values firm to circa $200 FOB (up circa 5% since the start of Jan). US/EU wheat continue to struggle to compete.

  • US corn market continues to appear finely balanced, with strong export/ethanol/feeding demand underpinning prices and large amounts of unsold corn hanging over the trade.

  • Iraq buys 150tmt hard wheat (Australian/Canadian/US origin).

  • US funds continue to largely cover in short positions – now estimated -75,900 (CBOT SRW wheat), 15,000 (CBOT corn).

  • Strategie Grains place EU 2017/18 wheat crop at 141.7mmt, versus 141.8mmt last year.

  • US weekly corn export sales continue to grow, with 1.974mmt reported (avg. of circa 1.7mmt over the last 5 weeks). Wheat sales of 311tmt in line with market expectations.

  • ABARES increase Australia’s 2017 wheat crop estimate to 21.2mm, up from 20.3mmt prev.

WEATHER/CROP DEVELOPMENT

  • US Southern Plains weather continues to look dry in the extended forecasts – though some good rains are indicated for the east of the plains. US drought monitor highlights Kansas conditions to be the driest on record for the last 3 months.

  • Ag Rural report Brazil’s corn harvest to be 15% complete (29% last year). Safrinha corn planting progress seen at 46% complete versus 58% last year (41% the 5 year average).

  • Buenos Aires Grain exchange suggest 56% of Argentina’s soybean crop and 58% of their corn crop is in poor/very poor condition. Below normal rainfall and above normal temps expected for the next 2 weeks.

  • Some longer term forecasts indicate freezing conditions for some Black Sea areas. EU growing conditions continue to appear unthreatening.

BOTTOM LINE:

  • Weather continues to hold centre stage, with ongoing concerns surrounding US/SA growing conditions prompting US funds to largely cover in short positons.

  • Global wheat fundamentals continue to be heavy and with US funds positions more balanced now following weeks of short covering, less technical support arguable exists.

  • However if weather holds dry in the Southern Plains in particular, markets will likely remain well supported. USDA Outlook Conference this Thurs/Fri will be closely observed, with US all-wheat and corn balance sheets due to be released. That aside, US and SA weather should continue to dominate attention.

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