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Market Report 23rd Feb 2018


EU markets close firmer this week due to fears of freezing conditions, whilst US markets consolidate somewhat following beneficial rains to parts of the Southern Plains.

  • US weekly export sales continue to suggest strong corn demand with 1.55mmt reported. Wheat sales of 395tmt in line with trade estimates.

  • EU weekly wheat exports reported at 135tmt, taking the season total to 13mmt (down 19% on the previous season).

  • Russian wheat exports as of 14th Feb reported at 25.4mmt (almost 40% up on the same time last year).

  • US funds estimated net short 79.5k wheat, long 48.4k corn and 72.8k soybeans.

  • USDA Outlook Forum place US 2018 wheat area at 46.5m/a (46m/a in 2017).

  • Buenos Aires Grain exchange reduce Argentine soybean crop estimate by 3mmt to 47mmt, with corn reduced 2mmt to 37mmt following recent dry weather (Rosario est. 46.5mmt and 35mmt respectively).

  • IGC cut 2017/18 world corn production by 6mmt 1.048bmt, largely due to concerns around SA production. Wheat figure left unchanged at 757mmt.

WEATHER/CROP DEVELOPMENT

  • Good rains for the eastern 1/3 of the Southern Plains boosts crops, though the rest of the area remains dry. 2 week forecasts also suggests little moisture looking ahead.

  • Dryness across Argentina persists, with extended forecasts suggesting little in the way of respite. IMEA report Matto Grosso safrinha corn planting at 68% complete versus 79% this time last year.North Brazilian forecast suggest dry weather through the week, followed by rains.

  • Freezing temps expected across parts of northern and eastern Europe over the next few weeks. Situation will be monitored closely for winterkill risk in areas lacking snow cover. French wheat conditions reported at 83% g/e (93% this time last year).

BOTTOM LINE:

  • In short, weather remains the dominant feature at present and whilst issues persist in US, SA, and EU, markets will look to retain a level of risk premium. That said, it remains too early for the extent of any crop damage to be known, especially in the case of US HRW and EU/FSU wheat.

  • World corn/wheat stocks are known to be onerous and the US fund position has also levelled over recent weeks. Crop condition reports from the US will be closely monitored tonight, that aside, expect volatile, weather focused trade to continue as we progress towards spring.

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