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Market Report 22nd March 2019

March 25, 2019

Markets trade largely sideways, though US weather developments supportive.

  • EU soft wheat exports to non-EU destinations down only 11% y/o/y now after better sales over the last 2 months.

  • US funds estimated net short -283k (corn), -62k (soybeans), -130k (wheat). Corn short now record large.

  • US weekly export sales reported at 856k (corn), 299k (wheat), 1mmt (soybeans). Wheat sales fell short, with 600k/week needed to reach current targets. 300k corn business reportedly done with China late in the week, providing support.

  • London wheat market supported by the weakening pound, though this could be reversed if sentiment towards a deal changes.

  • UK physical wheat markets dynamics suggestive of a surplus into next season, with demand beginning to slow – aided in part by increasing maize imports. Potential for zero-tariffs on imports next season, also perhaps influential.

  • Attache report suggests Egypt will have import requirements of 12.6mmt next season (up from an estimated 12.5mmt this season). Points to greater usage with production also estimated up 300k next season, at 8.77mmt.

WEATHER/CROP DEVELOPMENT

  • Excessive rain for the US Corn Belt continues to cause concern. 7-10 day models point to little relief.

  • Speculation around US spring wheat losses due to melting snow and flooding continues to mount. Forecasts indicate more problematic weather in the short term.

  • France AgirMer place wheat crop ratings at 85% g/e, up from 79% this time last year.

  • Some reports from Eastern Australia that farmers are holding off buying and applying further inputs for crops due to the drought conditions. Suggestion that there may be a El Nino weather pattern developing – implying the dry growing conditions may be set to continue. Though planting does not begin till April/May.

BOTTOM LINE:

  • Market sentiment improves somewhat as US weather in particular leans positive.

  • Although fundamentally little has changed, weather concerns in the US have begun to gather momentum, leading markets to add risk premium. This combined with the large spec fund shorts in corn/wheat should help underpin markets to an extent in the short term.

  • Brexit and Sterling trading continues to dictate market proceedings domestically. From a physical standpoint however, old crop supplies appear adequate and new crop prospects very good at present.

  • USDA Stocks and Prospective Plantings report this Friday 29th will be the focus for grain markets this week. Expects weather/politics to characterise trading in the lead up.

     

     

     

     

     

     

     

     

     

 

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