Market Report 16th March 2018


US markets move lower on better rain prospects for drought stricken US HRW areas.

  • Scottish Government Dec 1st plantings survey suggests winter cropping down 11% on last season. Winter wheat area estimated to be down 11% at 92.9kh, whilst winter barley estimated down 20% at 41.6kh.

  • US funds estimated net short wheat 60.4k, long corn and soybeans 248.7k and 148k respectively

  • US weekly corn exports of 2.5mmt reinforces the strength of demand for corn. Poor sales of 163k for wheat, suggests that the US continues to be uncompetitive.

  • Rosario Grain exchange lower Argentine corn crop by 3mmt to 32mmt (BAGE 34mmt). Rosario also cut their Argentine soybean crop estimate by 6.4mmt to 40.1mmt (USDA 47mmt).

  • Egypt’s GASC buys 240k wheat Russian/Romanian origin. Price of $233 c&f the highest paid in circa 3 years. Algeria buys 150k wheat (believed to be French origin).

  • Russian 12.5% FOB prices rise to $209, a 2 year high. Exports of 27.1mmt to the end of Feb up circa 43% on last season.

  • France AgriMer cut wheat export forecast to 8.5mmt for the season (9mmt prev.). Due to higher on farm feeding however, ending stocks reduced from 3.25mmt to 3.17mmt.

WEATHER/CROP DEVELOPMENT

  • Better rains in northern Kansas over the weekend boosts wheat crops. Forecasts for the Southern Plains over the next month continue to suggest dry conditions.

  • Argentina receives good rains to 60% of growing areas – though trade perception that it’s too late to be of any benefit to the crop. BAGE report the Argentine corn harvest at 8% complete (10% this time last year). Early indications suggests yields back 25% on last year, with 74% of the crop poor/very poor condition.

  • Brazil forecasts appear benign for the next fortnight, but will remain closely monitored. French winter wheat crop rated 80% g/e, down 1% on the week.

  • EU/FSU forecasts remain largely unthreatening.

BOTTOM LINE:

  • Better rains than expected for the US Southern Plains, combined with poor export sales reported end of last week has turned market tone more negative. Market perception appears to be that the US winter wheat issue has now been largely traded and any further move higher will require another major production issue to justify it.

  • Eyes will likely now be turning towards USDA’s 29th March stocks and prospective plantings report for any adjustments to the old/new crop balance sheets. That aside, expect US HRW/SA weather to dominate daily trade direction, with EU markets likely to follow.

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