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Market Report 30th November 2019


Markets close marginally higher after a quiet week with the G20 Summit and planned US/China talks the focus.

  • US/China come to a temporary truce at the G20 summit, placing a hold on any further tariffs whilst talks continue over the next 90 days. In a statement released, China agreed to start buying agricultural products ‘immediately’.

  • JCI China consults suggests the Chinese trade have bought over 20mmt less wheat from the 2018 crop to date, with Government procurement for their stock piling programme also down circa 20mmt. Implies significantly less wheat availability than the 132.5mmt reported by the USDA recently. An estimate which would be up 4.5mmt on the previous season.

  • Some suggestion by JCI that the US/China trade talks could lead to increased wheat imports from China in light of domestic shortages. This could further tighten the Global balance sheet if correct.

  • US funds estimated net short -31k (corn), -50k (wheat), -60k (soybeans).

  • US weekly export sales: corn (1.27mmt), wheat (377tmt), soybeans (629tmt). Largely in line with expectations, corn sales aside.

  • Algeria buys 600tmt wheat, believed to be French/FSU origin. US offers estimated circa $10 too expensive.

  • AHDB Early Bird survey predicts the UK all wheat area to be up 4%, with winter barely up 13% and oats up 9%. Spring barley and OSR areas are both forecast to be down 3% on last season.

WEATHER/CROP DEVELOPMENT

  • US winter wheat ratings drop 1% to 55% g/e

  • Western European forecast show better rain prospects for the next 2 weeks, easing concerns around extended dryness.

  • FSU snow cover is reported to be reasonable, providing crops with some protection against winterkill now that temperatures are beginning to drop sharply.

  • ABARES report better rains for Eastern Australian crop areas, though suggest it is likely too late to benefit wheat crops.

  • BAGE report Argentine wheat harvest 32% complete vs 21.2% last week (31.4% last year). Yields so far have been reported 10-15% below last season.

BOTTOM LINE:

  • Markets traded sideways in advance of the G20 summit, with the news of a temporary truce providing support late in the week. Tone appears more constructive to markets following the agreement, although soybeans is the most heavily reliant on Chinese trade, grains should benefit by association.

  • Little change otherwise to the broader picture as the trade seeks clarity on the timings of any slowdown in Russian exports. US will need to attract a considerable volume of business in the second half of the season to reach current USDA estimates.

  • UK wise, both buying and selling has begun to slow, leaving markets increasingly led by external factors. House of Commons vote on 11th will clearly be highly significant to Sterling and consequently UK wheat price direction. This also coincides with USDA’s next S&D’s report due for release on the same day, suggesting a volatile session.

  • Expect markets to remain range bound in the interim.

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