Market Report 29th June 2018


Markets close largely higher on the week, with USDA data on Friday largely overlooked, as EU/FSU crop concerns take centre stage. USDA highlights:

  • US corn acreage placed at 89.128m/a, up 1.12m/a and above trade estimates. All wheat acreage placed at 47.821m/a, up 0.482m/a and also above trade expectations. US corn stocks were placed at 134.78mmt, 1.78mmt higher than trade expectations. Wheat and soybeans stocks were in line with expectations, at 27.94mmt and 31.04mmt respectively.

  • Strategie Grains cut French wheat crop estimate by over 4mmt to 33.2mmt, significantly below other trade estimates and also last year’s production of 36.6mmt. Sovecon reduce Russian wheat crop estimate marginally to 72.5mmt, down from 73.1mmt. Some trade estimates as low as 67mmt.

  • US funds estimated net short -90.7k (corn) -12k (wheat) and -52.6k (soybeans). US/China trade standoff remains closely monitored - any easing of tensions will likely support Ag markets.

  • Black Sea Futures climb $5/t late on Friday, supported by both the rally in Matif as well as new crop production concerns.

WEATHER/CROP DEVELOPMENT

  • Black Sea weather continues to look hot/dry for the next 10days/2 weeks. Recent rains reportedly only benefit 1/4 of crop areas. Eastern Ukraine and Southern Russia in particular look set to avoid any meaningful rain. The hot/dry trend is believed to have brought harvest 2/3 weeks ahead of normal. Early yield reports vary, but generally trend lower.

  • Hot and dry conditions for France expected to continue this week. Suggestion made that heavy rains in March/April combined with the current hot/dry weather has curbed yield potential.

  • US Midwest forecast for hot conditions this week – potentially stressing crops. With little rains forecast to accompany the higher temps, Corn Belt weather maps will be monitored very closely for the next 2 weeks.

  • Indian forecast improves for the next 2 weeks, with heavier, more widespread rains expected.

  • Beneficial rains for W/SW Australia expected.

BOTTOM LINE:

  • Fridays somewhat bearish USDA data did little to alter sentiment, as markets reacted strongly to a sharp reduction in French wheat crop estimate by Strategie Grains earlier in the day.

  • Weather for the week leans positive with hot temps and dry conditions for the US Midwest as well as parts of the EU/FSU expected. The window for serious damage to US Corn yields is narrowing, making the next 3 or 4 weeks weather central to direction.

  • US funds have switched positions to the short side of the market – providing some underlying technical support. Expect dynamic market action to continue with Black Sea/EU wheat and US CornBelt conditions key to direction day-to-day. The trade will also remain wary of external market influence from any US/China developments over the coming weeks.

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