Market Report 1st March 2019

March 4, 2019

Sharp sell-off this week lead by US markets, as a lack of constructive news re. the US/China trade deal, helps spark liquidating trade.

  • Ensus announce intention to resume ethanol production in March, boosting London Futures. Though it appears this will be at reduced capacity, with limited wheat used initially.

  • Latest UK S&D figures released place wheat production at 13.953mmt for this season, down 133k on prev. Usage reduced by 166k however, leaving an exportable surplus of 800tmt. Trade view that a carryover to new crop is highly likely with export market conditions very challenging.

  • UK barley exportable surplus now estimated in excess of 1mmt, with production raised and consumption reduced.

  • Russian private analysts IKAR and ProZerno forecast the 2019 wheat crop at 78.5mmt and 81mmt respectively (71.6mmt this season).

  • Canadian Grain Commission report wheat plus durum exports to January of 12.8mmt versus 11.5mmt last year. Ag Canada est. 23mmt total for the season.

  • US funds estimated net short -104k (corn), -38k (soybeans) and -80k (wheat). Chicago wheat has now sold off more than $20/t in the last month.

  • US weekly export sales 1.2mmt (corn), 476tmt (wheat), 2.2mmt soybeans). Corn and soybeans exceeded expectations, with wheat business routine.

  • A summary of latest private analysts estimates suggest World major exporter wheat production next season is forecast up 7.1% on this season at 395mmt (a rise of 27mmt).

WEATHER/CROP DEVELOPMENT

  • Very low temps expected for the Northern Plains and Western Corn Belt will be closely monitored. US HRW areas have been suffering from excessive rainfall with the 10-14 day models indicating more above normal precipitation.

  • Northern EU spring sowings believed to be nearly completed, well ahead of normal for this time of year.

  • Similarly, UK spring plantings are well ahead of schedule with soil conditions excellent. Wetter forecast in some areas for the next week may stall progress however.

BOTTOM LINE:

  • Markets liquidate this week, with bullish news limited. Resistance to selling appeared lacklustre.

  • World market sentiment holds negative as US/China trade talk progress stalls and Global weather continues to point to a large rebound in wheat production next season.

  • UK wise, it looks increasingly like the old crop dynamic has changed from one of undersupply to one of oversupply – particularity in light of current export market conditions. London wheat remains focused on Brexit as well as EU/US trading, with physical market activity light.

  • Expect more of the same until US spring plantings get underway late March. Perception remains, absent support from politics, US wheat may struggle to sustain any rallies at present. EU markets may well follow by proxy.

     

     

     

     

     

     

     

     

     

 

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