Market Report 28th September 2018
Markets trade sideways this week, with USDA data released on Friday perceived to be bearish corn, neutral wheat.
USDA place Sep 1st US corn stocks at 54.4mmt, 3.3mmt above trade expectations.
Sep 1st US wheat stocks placed at 64.8mmt, around 950tmt above trade forecasts. Size of US wheat crop changed very little however.
US wheat closer to export competitiveness following the decline in CBOT and rise in Russian FOB values this week. US wheat exports running 30% down y/o/y to date.
Sovecon cut Russian wheat exports estimate by 400tmt to 33.5mmt. Trade still anticipating sub 30mmt this season.
IGC increase world corn production figures by 10mmt to 1.074bmt, largely due to increases from US, EU and Ukraine. Wheat production increased by 1mmt to 717mmt. Soybean production raised 4mmt to 370mmt (339mmt last season).
UK wheat opening stocks reported at 1.718mmt, down 37% y/o/y and would amount to the lowest level in 4 years.
US weekly export sales: corn (1.713mmt), wheat (657tmt), soybeans (871tmt). Reasonable volumes for wheat/corn, in line with requirement to reach USDA’s projections.
US funds estimated net short -125k (Corn), -60k (Soybeans), long 29k (CH + KS wheat).
US corn harvest progress estimated around 25% complete, up from 16% last week. Central/Eastern Corn-Belt conditions have been favourable for harvesting, though rains are expected across a number of areas over the next 10 days.
US winter wheat planting conditions remain ideal, though forecast for October suggests a turn to a wetter/colder forecast. Trade expectation remains of a circa 10% increase in wheat area as a result of lower corn/soybean prices.
SAFRAS suggest Brazilian 1st corn crop planting progress around 33% complete (up 10% on the week).
France AgriMer report corn harvesting at 21% complete versus 8% last week. Conditions ratings held at 58% g/e (80% g/e last season).
Markets continue to trade recent ranges with news relatively thin this week.
Russian supplies remain heavily offered into the world market and whilst this remains the case, upside would appear limited in wheat. Adding to this, US corn harvesting is well underway, with early reported yields seeming to confirm USDA’s record high crop forecast.
That said, given the well documented shortfalls in EU/FSU wheat production this season (and likelihood of similar declines from AUS), markets should have solid underlying support, particularly following the recent selloff.
Short term, expect more of the same, with markets likely needing FSU/AUS trade to lead higher if Global markets are to break from current ranges.