Market Report 24th August 2018
Markets break sharply lower as funds continue to liquidate positions absent new supportive input.
US ProFarmer Tour places average corn yield at 177.3b/a, relative to 178.4b/a from USDA. Historically the tour has been 2.4b/a lower than the USDA’s September estimate, implying final yields may approach 180b/a.
Fridays COT report showed US funds reduced positions less than expected, despite the market sell-off. Though numbers only reflect trade to Tuesday. CH+KS Wheat (+125k) Corn (-15k) Soybeans (-40.1k).
IGC increase Global maize production by 12mmt to 1.064bmt, up 20mmt on last season. 2018/19 stocks/use ratio is however expected to decline 4% to 23.2% as a result of heightened demand.
IGC lower World Wheat Production by 5mmt to 716mmt, with declines largely from the EU-28/AUS (758mmt last season). Ending stocks increased 1mmt however to 248mmt – 266mmt in 2017.
German Farm Ministry place winter wheat production at 19.4mmt, down from 24mmt last season.
Sovecon estimate the Russian wheat crop at 68.8mmt, in line with USDA (85mmt last year). Exports placed at 33.9mmt, 1.1mmt less than the USDA’s forecast.
Field yield reported from Russia this week imply a y/o/y yield decline of 20%, which would point to a sub 65mmt wheat crop if correct.
US Corn Belt weather continues to offer little threat to crops, with good rains and no extreme heat anticipated for the next 2 weeks. Corn ratings down 2% on the week to 68% g/e
US spring wheat harvest 60% complete, up from 35% prev. (44% average).
Saskatchewan weekly crop report suggests spring wheat 5% harvested with durum 14%. Top soil moisture is reported to be 75% short/very short following circa 2 months of no significant rain.
Australia continues to struggle from lack of moisture, with even Western Australia receiving minimal showers. Forecasts imply 2/3 of the Eastern crop areas will miss rains this week.
UkrAgroConsult raise warning that hot/dry weather may have harmed their corn crop more than first thought.
Markets continue to liquidate, driven by both technical selling and a lack of fresh bullish news to provide support.
US ProFarmer data released provided few surprises, reaffirming the USDA’s suggestion of a record US corn crop this season. The benign US weather outlook also continues to contribute to the negative sentiment.
World grain fundamentals continue to point to a tightening of stocks, but this may not become evident until the second half of the season. If EU/FSU markets won’t lead the World trade higher, then US will be under pressure to fall to become competitive.
Given the strength of the recent sell-off, markets may look to trade the ranges in advance of USDA’s next report due on Sep 12th - particularly in light of its significance historically.