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Market Report 12th Jan 2018

January 30, 2018

 

Markets close the week lower following the release of somewhat bearish wheat/corn data from USDA.

 

 

USDA Summary:

  • US winter wheat plantings placed at 32.61m/a, significantly higher than the average trade estimate of 31.3m/a.

  • US wheat ending stocks increased 790,000t to 26.92mmt (trade est. 26.1mmt).

  • Decrease to Global wheat beginning stocks largely mitigated by production increases in Russia/Pakistan. Leaves Global ending stocks down 400,000t on before at 268.02mmt.

  • EU wheat exports reduced 1.5mmt to 27mmt (trade expect further reductions will be required). Australian exports also reduced 1.5mmt, with Russian exports increased 1.5mmt to 35mmt.

  • US corn yield increased from 175.4b/a to 176.6b/a. Corn ending stocks raised 1.01mmt to 62.93mmt (trade est. 61.75).

  • Global corn ending stocks increased 2.49mmt to 206.57mmt (trade est. 202.8mmt).

 

WEATHER/CROP DEVELOPMENT

  • US HRW areas expected to be dry according to 7-10 day forecasts, with temperatures moderating.

  • North Brazil receives beneficial showers (still lower than normal levels for this time of year).

  • Above normal temperatures in parts of Argentina this week, with scattered showers expected in key growing areas.

  • Cold weather expected in parts of Russia, though nothing severe forecast.

BOTTOM LINE: USDA data released on Friday did little to alter the current sentiment, with a larger US wheat acreage and ending stocks figure than expected by the many in the trade sparking markets to sell-off late in the session. The presence of the large US fund shorts in wheat/corn should continue provide some underlying support, though equally, at present there appear few old or new crop supply issues to stimulate a sustained rally beyond current levels. US markets re-open Tuesday following Martin Luther King Day today - expect weather/currency led trade with the focus increasingly towards spring plantings.

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