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Market Report 7th September 2018

September 12, 2018

Markets continue to break with UK wheat demand centre stage following Vivergo’s closure announcement mid-week.

  • Vivergo announce intention to close indefinitely at the end of the month, citing poor trading conditions. Annual usage at full capacity is in excess of 1.1mmt wheat.

  • US weekly export sales 378tmt (wheat), 1.063mmt (corn) 1.27mmt (soybeans). Wheat sales in particular fell below expectations.

  • Some suggestion Turkey may be restricting flour exports from flour made with domestic wheat - flour made from imported wheat reported to be acceptable however.

  • US funds estimated net long 88k (KS+CH wheat), short -80k (corn), -70k (soybeans).

  • Informa estimate US corn yields at 178.8b/a, towards the higher end of trade projections (USDA 178.4b/a).

  • Russian Ag Ministry continue to assert their intention to operate without export tariffs this season, despite poor yields. Russian inflation announced at 3.1% this week - last time controls were put in place in 2015, general inflation was approaching 15%.

  • Russian wheat exports of 9.5mmt since 1st July continue around 60% up on last year’s pace. Corn exports are down 31% however, with barley down 9.8%.

  • BOE meeting due this week will be monitored re. currency – Brexit headlines may continue to dominate direction however.

WEATHER/CROP DEVELOPMENT

  • Alberta’s weekly crop report suggests 13% spring wheat has been harvested – Durum closer to 30% complete.

  • Saskatchewan continue to report harvest pace well ahead of normal with 39% of all crops harvested, relative to the 5 year average of 25%.

  • ABARES’s weekly report downplays the significance of the recent rains across Australia – though topsoil moisture shortages appear less severe than originally thought. Recent frosts in the Southeast have also put pressure on crops.

  • BAGE report Argentine wheat 74% g/e condition – wheat area left unchanged at 6.1m/h.

BOTTOM LINE:

  • Bearish momentum in wheat remains as funds continue to liquidate longs absent new supportive fundamental input to the market.

  • In short there’s little change apparent to the broader outlook. Wheat availability is plentiful at present, though the Global balance sheet would imply tighter trading conditions later in the season. At what point this will become evident remains the key question.

  • USDA’s latest update is scheduled for 12th – though wheat data will not feature - expect markets to trade the recent ranges in the interim, with the report likely setting the tone for the balance of the week.

     

     

     

     

     

     

     

     

     

 

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