Markets close the week largely lower with politics and currency the key
drivers with fundamental news thin.
A social media post from the US President implied tensions may be beginning to ease
with China. Trump suggested trade discussions are ‘moving along nicely’. Soybeans and
corn led higher as a result.
Informa lower US corn yield to 179.7b/a from 182.1b/a in October. FcStone suggest
181.4b/a in their latest estimate (USDA 180.7b/a).
Informa cut Australian wheat production to 16.6mmt, down 1.9mmt on prev. and in line
with other private estimates.
US weekly export sales: 394k (corn) 930k/week needed to reach USDA targets. 583k
(wheat) above trade expectations.
Sterling rallies 1.75% versus the Euro as Brexit news turns more constructive. Still circa
10% below pre-referendum levels. Sterling strength going forward presents the risk of
added pressure to London wheat.
US funds estimated net long 12k (corn), short -70k (soybeans) and -40k (ch + ks wheat).
USDA 10 year baseline data released on Friday. Projected US corn area of 92m/a and
51m/a for wheat largely above trade expectations. Corn area for this season’s record crop
Russian Ag Ministry increase wheat export estimates to 33-34mmt due to an ‘improved
outlook’ from harvest.
ABARES suggest some rainfall for the Southern and Western Australian grain areas. This may be less than 10mm however.
Some concerns still around dry conditions across parts of the EU and winter crop development.
US corn harvesting continues to progress, estimated circa 70-75% complete.
Russian wheat harvesting almost complete. 43.8m/h cut versus 45.2m/h this time last year.
UK wise, the market continues to grapple with the impending closure of Ensus,
with wheat supply dynamics moved from a likely situation of deficit to one of
surplus for the season. This implies the UK may need to become export
Brexit continues to present risks for grain values on both sides. A ‘No Deal’ offers
huge uncertainties for grain exports, whereas a ‘Deal’ scenario suggests serious
currency risk given Sterling is still valued significantly below pre-vote levels.
Global price outlook still appears tied to Russian export pace, and as yet, this has
failed to slow markedly. USDA are due to release their latest round of S&D’s on
Thursday. Expect range bound trade in the interim with currency/politics likely