Market Report 18th May 2018
Markets bounce this week following the recent sell-off. Easing of US/China trade tensions combined with resumed new crop supply concerns, act as catalysts.
US/China announce intention to put trade tariffs on hold – news supportive to US corn/soybeans markets with increased imports of both to China reportedly being discussed.
US funds estimated net short 17.1k wheat, long 228.8k (corn) 71.5k (soybeans).
SAFRAS estimate Brazil’s total corn crop for 2018 at 79mmt, down from 88.9mmt last year (USDA’s May estimate 87mmt).
Euro continues to weaken versus the dollar, supporting matif wheat (now at 7 month lows). Sterling firms on employment/wage growth data released.
US weekly export sales of 985k (corn) 195k (wheat) - further illustrating the lack of demand for US wheat at current levels.
US HRW forecast return to drier conditions after showers last week. Forward forecasts at present suggest below normal rainfall for much of the Southern Plains.
US Corn planting believed to be circa 75% complete, marginally behind the average for this time of year. Forecast suggested scattered light showers in parts.
Canadian Prairie’s remain largely dry, though Western areas may receive some rainfall this week.
Southern Ukraine/Russia remain dry but are forecast for some rains. Russian spring wheat plantings continue to progress slowly, though better conditions forecast for the next 2 weeks should boost progress.
Australia continues to appear largely dry in the extended forecast (some rains expected for coastal areas). ABARES suggest producers are delaying plantings, hoping for better soil conditions.
EU crop conditions largely unthreatening after better rains last week. Forward forecasts also imply more normal conditions for this time of year.
France AgriMer suggest corn planting progress at 86% complete
Markets consolidate following on from the circa 50c sell-off in CBOT wheat of the last few weeks, with weather/politics supporting the rally. Weather continues to principally dictate direction and in spite of improved weather outlooks in some areas of concern, issues in some parts of Aus/Can/FSU/US remain unresolved.
That said, old crop Global wheat stocks are burdensome and US funds have significantly reduced shorts in wheat, also building a significant long in corn - removing some underlying technical support.
Expect volatile trade to persist, as the weather outlook continues to occupy much of focus. Geo-political/currency influence will also remain closely monitored, particularly until there is more clarity around what the US/China situation will ultimately mean for Ag S&D’s.