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Market Report 23rd March 2018


Markets continue to consolidate, led by CBOT wheat, as better than expected showers bring relief to dry HRW areas this week.

  • Chinese retaliatory trade tariffs with the US include pork and ethanol, with no cereals mentioned directly. Impact believed to be marginal, though corn/soybeans may feature if there is further escalation.

  • US weekly exports sales of 1.47mmt (corn), 430tmt (wheat) and 759tmt (soybeans). UK believed to have bought a cargo of wheat following the recent fall in CBOT wheat.

  • US funds estimated net short 55.4k wheat, long corn and soybeans (232.5k and 141.9k respectively).

  • EU weekly exports disappointing again at 108tmt, taking the season total to 18.5mmt, versus 23.9mmt this time last year (20mmt expected for season on current pace). Strong internal feed/milling demand helping to mitigate this somewhat.

  • IGC place 2018 World wheat production at 741mmt, down 2% on last year. Major exporter’s carryover expected to decline circa 12mmt. Record stocks carried into this season expected to keep supply levels secure however.

  • Informa’s March acreage survey shows US planted corn area at 88.9m/a (90.2m/a in 2017).

WEATHER/CROP DEVELOPMENT

  • US HRW areas due for some rains early this week, though most recent maps suggest the Southern Plains may receive little. Longer term forecast beyond this week continue to point to below average precipitation.

  • Ag Rural report Brazilian corn harvest 43% compete versus 56% this time last year. BAGE report Argentine corn harvest at 13.3% complete, versus 8% last week. Crop now rated 75% poor/very poor – up 1% on the week. Brazilian forecast look favourable for the next 2 weeks.

  • Cold/wet conditions set to persist for large parts of Russia/Ukraine. Spring plantings lagging behind as a result (circa 40% of Russian wheat area expected to be spring). Russia’s state meteorology department estimate just 3-5% of the winter wheat crop in poor condition, with soil moisture levels very good.

BOTTOM LINE:

  • Weather retains the focus, as better than expected rains for the US Southern Plains last weekend help spark the selloff – that, combined with a general ‘risk off commodities’ attitude in the midst the US/Chinese trade fallout.

  • In short, record stocks of wheat/corn make it difficult to foresee a supply shortage in 2018 unless conditions deteriorate sharply in one of the worlds key growing areas outside of the US. USDA stocks and plantings report is due out later this week and will likely occupy much of the focus – expect US/SA weather to continue to shape direction in the lead up.

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