Market Report 1st February 2019


Markets close largely unchanged on the week as the trade looks ahead to Friday for much awaited USDA data.

  • Some optimism surrounding US/China trade talks as Trump gives positive feedback re. agreements supposedly made on Ag products as well as hints of a wider agreement. Political analysts continue to suggest there are wide differences between the two sides.

  • Sovecon increase estimate of 2019 Russian wheat crop by 2.7mmt to 80mmt as a result of higher winter plantings and benign weather to date for wheat crops.

  • Russian Ag Ministry reduce wheat export estimate for the season by 1mmt to 36mmt.

  • US export sales for late December reported at 1.7mmt (corn), 530tmt (wheat), 2.4mmt (soybeans). All in line with expectations. US wheat exports continue to be down 10% year on year. Up to date exports will not be released until mid-March following the Gov shutdown.

  • US funds estimated net long circa 110k (corn) -20k (wheat), square soybeans.

  • Egypt buys 360tmt wheat French/Romanian origin. Russian offers were priced out, further implying supplies are beginning to tighten - though French offers were perceived to be aggressive. US was also too expensive.

  • Egypt forecast 2019 domestic wheat crop at 9.5mmt, up 500tmt on this season (larger planted area expected).

  • Brexit developments continue to dominate London wheat trading. Latest political analysis increasingly points to a ‘softer Brexit’ - economists imply this would more likely firm Sterling from current levels.

WEATHER/CROP DEVELOPMENT

  • US wheat crop winterkill remains a possibility in light of recent freezing conditions. Though snow cover is perceived to be adequate in most major growing areas.

  • UK winter crop conditions continue to be anecdotally reported in very good condition, despite the recent colder conditions.

  • FSU/EU winter crops also appear to be in reasonable health according to reports from the areas.

BOTTOM LINE:

  • Markets chop sideways this week, staying within recent ranges absent new fundamental developments.

  • In short, market dynamics remain unchanged with the US focused on Chinese trade negotiations, the EU on declining Black Sea wheat availability and UK on Brexit.

  • USDA reporting due on 8th is widely expected to be significant to market sentiment going forward given the context surrounding its release. Expect range bound trade in the lead up.

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