Markets consolidate early in the week before rallying in response to supportive S&D data released by USDA. USDA Headlines:
US corn old crop carryover lowered by 1.9mmt to 51.48mmt. Trade largely expecting an increase in stocks. Decrease largely as a result of increased exports forecast.
US corn yield projection left at 174b/a – trade forecast closer to 180b/a at present.
World wheat production reduced by 8.4mmt to 736mmt (21mmt below last year). Main declines came from the EU, Australia, Russia and Ukraine.
Major exporters stocks/use ratio for 2018/19 wheat approx. 22.4% basis the latest USDA data. Lowest level since 2006 and 6-8% below the level of the last few years.
Russian Ag Minister estimates wheat crop at 64.5mmt, compared to USDA at 67mmt. Other private estimates range from 68-72mmt, with Sovecon out at 69.6mmt earlier in the week.
US funds estimated net short -141k (corn) -1.2k (wheat) -64.5k (soybeans).
CONAB place Brazilian corn crop at 82.9mmt, down from 85mmt previously (97.8mmt last year).
French Ag Ministry place wheat crop at 36mmt, only 0.5mmt lower than last year. Estimate 3mmt higher than that released by Strategie Grains last week.
US Corn Belt weather perceived to be unthreatening, with temps expected to moderate this week. Crop rated 75% g/e, down 1% on the week
US spring wheat conditions rise 3% to 80% g/e - historically an extremely high level. Heading is at 81%, compared to 69% 5 year average, raising some doubts as to potential quality levels.
BAGE report Argentine corn harvest at 71% complete, up from 63% the previous week (64% 5 year average). Wheat reportedly 87% planted, up 8% on the week.
Western areas of Russia and Ukraine forecast for rains this week. Models for driest parts of Eastern Ukraine and Southern Russia are less clear.
UkrAgroConsult suggest 28% of wheat has been harvested
Saskatchewan wheat rated 77% g/e after good rains over the last few weeks.
ABARES continues to point to dry conditions for Eastern Australia. Scattered showers are expected for Southern areas.
Rains forecast for France/Germany over the next 2 weeks expected to hinder harvest progress. French crop ratings reduced by 1% on the week to 72% g/e (still a relatively high level).
Markets close lower on the week despite constructive wheat/corn data released by the USDA on Thursday.
Fundamentally, wheat crop concerns in Russia, Ukraine, EU and Australia remain unresolved and as such, this implies a sharp decline in availability for 2018. Markets may well need more clarification of harvest results before moving higher however, particularity with US/China tensions ongoing and benign US weather prompting questions of a record corn crop.
Expect choppy, volatile trade to persist with FSU/EU/US harvest results and crop conditions central to trade ideas over the next few weeks.