US/SA crop concerns help drive significant US fund buying through the week, before markets sell-off late on Friday. US futures close circa $13 up on the week.
DEFRA revise UK wheat production lower by 326tmt to 14.837mmt, though demand also reduced by 507tmt. Suggests a balance in excess of 1mmt to be exported, taking out normal strategic carryover stocks.
US funds estimated net short 51k wheat, long 135.3k corn and 136.6k soybeans.
US weekly export sales reported at 1.75mmt corn, 191k wheat. Strong export/ethanol/feeding demand for corn remains apparent - though large amounts of farm corn is still believed unsold.
Buenos Aires Grain exchange reduce Argentina’s soybean crop by 3mmt to 44mmt (down 13.8mmt on 2017), corn forecast left unchanged at 37mmt (down 2mmt on last season).
Russian wheat prices continue to firm to new highs, with $207 fob traded last week. Firmer rouble and weather related logistical issues have helped support the rise.
EU Commission lower EU wheat exports estimate to 24mmt. Still perceived to be too high unless export pace picks up considerably in the second half of the season.
Sterling weakness continues on Brexit concerns, supporting London wheat.
Argentinian weather pattern continues to look drier than normal, with little rain expected this week or next for key growing areas.
US wheat crop condition reports fall for Kansas by 2% - leaving a good/excellent rated crop of 12%, circa 31% lower than this time last year. Similarly only 4% in Oklahoma rated g/e, down 39% on last year. US Southern Plains forecast continue to suggest dry weather for the next 2 weeks.
France AgriMer report wheat conditions 83% g/e, down 2% on the week. Heavy rains forecast for Western Europe will be monitored, as well as cold/dry conditions for Northern/Eastern Europe and the FSU.
Funds weighed in last week following the release of negative crop ratings for US HRW Belt, taking CBOT futures sharply higher, before running out of buying late on Friday.
Little has changed fundamentally over the course of the week. Wheat/corn stocks are sizeable into next season, suggesting current issues need to translate into serious crop losses if markets are to maintain current levels.
That said, funds continue to hold a significant short in wheat and forecasts suggest little relief to US Southern Plains or Arg/Brazil crops over the coming weeks. Whilst this remains the case, markets should remain well underpinned. Expect volatile/weather focused trade to continue this week, with US crop condition reports tonight, likely to be closely monitored.