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Market Report 5th Jan 2018

Markets close the week marginally firmer, with all eyes now turning

towards USDA’s all-important January crop report due on the 12th.

 US funds estimated net short 143.3k wheat, 237.1k corn.

 Crude Oil trades to 3 years highs of $62/barrel, up 12% in 2017. Firmer

Russian rouble as a result, has contributed to holding Russian cash wheat

values under US/EU levels.

 Unseasonably mild temperatures has allowed freight trade to continue

and contributed to record high volumes of wheat to be exported from the

Black Sea nations. Russian Ag Ministry has suggested up to 40mmt wheat

could exported from Russia this season (USDA est. 33.5mmt).

 Euro firms to 4 month highs against the dollar, adding further pressure to

Matif wheat futures.

 Algeria buys 550tmt wheat optional origin. Argentina were thought to be

the largest supplier by the trade.

 Iraq reported to have bought 100tmt wheat at the end of December

(Australian/Canadian origin).


US winter wheat crop ratings show declines in their latest updates. Kansas 38% g/e, down

from 51% prev. and 41% last year. Oklahoma 15% g/e and 42% p/vp versus 30% g/e and

10% p/vp this time last year.

Cold temps in the US expected to moderate this week. Trade conscious it is difficult to

assess the extent of the damage until closer to March and it is likely too early for major


Some rains for Argentina over the weekend, with more due mid-week. Extended

forecasts indicate mixed conditions for the rest of the month.

Buenos Aires Grain Exchange suggest that dryness continues to affect at least 1.7m/h of

land still to be planted in northern areas, with the window for planting closing in the next

few weeks.


Little change apparent in terms of the overall outlook for grain markets post the holiday

period, as trade remains stuck in a range.

Large fund shorts in corn/wheat remain, in spite of some short covering, whilst freezing

temps for US Southern Plains and SA dryness should encourage markets to continue to

hold risk premium, until these issues are better resolved.

Historically the January USDA report is perceived to be one of the most significant of the

year in terms of market direction - with the US HRW planted numbers of particular note,

as well as the updated wheat/corn S&D’s. As such, trade may well be sideways into

Friday, absent weather developments in US/SA, with volatility late Friday a possibility.

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