Market Report 7th December 2018

December 10, 2018

 

Markets firmer this week as positive US/China sentiment provides support.

  • Traders continue to watch for more clarification re. the status of the US/China trade talks and when China will again become a buyer of US ag products as suggested in their statement.

  • US maintains that tariffs on $200 billion of goods will rise from 10% to 25% if an agreement is not reached by the 90 day deadline.

  • EU wheat exports to date placed at 6.2mmt, down 30% y/o/y. Trade expectation is of circa 17mmt in total for the season compared to the USDA’s 23mmt estimate.

  • Egypt buys 6 cargos of wheat, Russian/Ukrainian origin for Jan shipment. 530tmt Russian wheat offered - more than the trade was anticipating.

  • Egypt’s GASC under scrutiny after failing to provide letters of credit for over 16 grain cargos. The Egyptian Finance Ministry have reportedly claimed the situation will not be resolved until January, delaying all remaining shipments until the New Year.

  • Speculation that Russia has agreed to send trial cargos of grain to both Algeria and Saudi over the next 6 months. Historically both have sourced the majority of their grain from the EU due to quality concerns surrounding FSU supplies (significant, as half of the total non-EU wheat exports this season have been to these countries).

  • US weekly export sales exceeded expectations - corn (1.178mmt) wheat (712tmt) soybeans (891tmt).

  • US funds estimated net short -31k (corn), -59k (soybeans), -50k (wheat).

WEATHER/CROP DEVELOPMENT

  • US HRW areas due for some very cold temps in parts over the next 10 days. Potential for winterkill here, given the melting of the snow cover in recent weeks.

  • W Australia forecasts appear dry which should boost harvest progress and reduce quality concerns to an extent. FSU snow cover reportedly good for the majority of areas, reducing the risk of winterkill.

  • BAGE report Argentine corn plantings at 41% complete vs 38% last week (46% average).

BOTTOM LINE:

  • Firmer tone this week instigated perhaps by follow-through positivity from the US/China trade talks, which, although not resolved, appear less corrosive. Otherwise, fundamental news thin.

  • Trade has begun to slow per the time of year with both buyers and sellers appearing content to wait for better opportunities.

  • All eyes are now on Tuesdays USDA at 5pm, with focus closer to home on any Brexit developments. Both will likely be central to market sentiment for the remainder of the year.

     

     

     

     

     

     

     

     

     

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