Market Report 21st September 2018


Grain markets rally higher, as selling seemed to run out following the recent break.

  • Russian Ag Ministry reduce wheat export estimates for the season by 5mm to 30mmt (USDA 35mmt). Trade still estimating closer to a 25mmt total.

  • IKAR reduce Russian wheat crop estimate by 400tmt to 69.2mmt.

  • Sterling weakens this week as rhetoric from the UK and EU turns more negative surrounding negotiations. Approx. 15% below levels prior to the referendum vote.

  • US funds estimated net short -158.4k (corn), -82k (soybeans), -8k (ch wheat), long 32k (ks wheat).

  • Stats Canada place all wheat crop at 31.02mmt using their satellite/weather based monitoring system. This is up from their ground based survey est., which suggested 29.98mmt.

  • Egypt’s GASC buys 475k (largely Russian origin). Syria also reportedly buys 200k Russian wheat.

  • UkrAgroConsult suggest wheat plantings will increase 1-2% at the expense of corn in 2019.

  • US FOB wheat trade now back to circa $10 above the cheapest Russian offers, after briefly becoming competitive.

WEATHER/CROP DEVELOPMENT

  • US corn harvest progress estimated around 18-20% complete, up from 9% last week. Some trade question marks continue to surround USDA’s yield projection.

  • US wheat plantings 13% complete according to NASS, compared to 14% average.

  • Approx. 27% of Russian spring wheat crops still to be harvested. Rains have slowed progress over the last few weeks. Some anecdotal reports suggest some of the remaining wheats are not ready to be cut.

  • Dry weather has been noted in parts of Southern Russia and Ukraine as well as Western Europe – potentially restricting winter plantings from establishing. Forecasts do show rains in some of these areas for this week however.

  • Australian weather appears dry for the nest 2 weeks.

BOTTOM LINE:

  • Markets close higher on the week as the US fund liquidation appears to have come to an end for the time being.

  • No major change evident to the fundamental outlook, with markets appearing likely to trade ranges until FSU markets lead higher (as supplies tighten) or a crop issue from another key world producer regains the trade focus.

  • Moreover, although US funds have reduced their longs in wheat, harvesting of what is expected to be a record US corn harvest is widely expected to weigh on feed markets until finalised.

  • Given the current lack of clear direction, and with the US corn harvest ongoing, any rallies would seem likely to be treated as selling opportunities.

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