Markets recover somewhat this week following the recent sell-off, as talk of potential Russian export controls helps provide support.
Speculation continues to circulate that Russia may look to put in place export restrictions of some kind. Russian ministers are due to meet on Monday to discuss.
Exporters have been assured of one months’ notice before any tariffs would be applied – encouraging large early season exports (that combined with the weaker Ruble). Wheat exports this season so far of 8.2mmt are up 60% on last season.
Egypt buys another bulk of new crop wheat, largely Russian origin (over 1mmt of Russian wheat offered as exporters seek to secure business while they can).
FcStone estimate US corn crop at 177.7b/a (USDA 178.4b/a).
Argentina is believed to be considering a 10% export tax on both wheat and corn.
Stats Canada place all wheat production at 29mmt, lower than trade expectations of around 30.6mmt (30mmt last season).
US funds estimated net short -79k (corn), -61k (soybeans), long 106k (Ks+Ch wheat).
Suggestion from Brussels that the EU may be softening its stance on Brexit in efforts to help secure a deal (GBP/EUR still approx. 15% below pre-Brexit vote levels).
US corn condition ratings 68% g/e, up 1% on the week. US spring wheat harvest 67% complete versus 61% average for this time of year. Still appears little threatening in the US forecasts.
Australian dryness continues to be of concern despite some recent rains. New South Wales August rainfall the lowest in 5 years. ABARES suggest the recent rains were less comprehensive than expected. Longer term forecast also suggest warmer and drier conditions than normal through to November.
BAGE report Argentine corn harvest at 98% complete. Crop estimate held at 31mmt (USDA 33mmt).
Saskatchewan weekly report suggests harvest progress 27% complete (20% 5 year average).
Northern EU looks dry for the next 2 weeks. Similarly Southern Russia/Ukraine appear dry through till mid-month.
Markets rebound to an extent following the recent break lower, as confidence in Russian export controls of some kind this season build - helping to encourage buying.
Fundamentally, the problem areasremain the same, with well reported crop issues in FSU/EU/AUS implying reduced wheat availability this season. Moreover, the technical outlook appears more constructive for MATIF/CBOT after last week’s rally – though US funds continue to hold large spec longs in wheat.
USDA reporting next Wednesday will be the next target for the trade, expect any export policy news in the interim from Russian and to a lesser extent Argentina, to be treated with sensitivity.