Market Report 17th May 2019
US markets lead grains sharply higher as poor corn planting weather drives fund short covering.
IKAR confirm 2019 Russian wheat crop estimate of 81mmt, up 10mmt on this season (May USDA 77mmt).
US funds estimated net short -298k (corn), -172k (soybeans), -138k (Ch+Ks wheat).
Strategie Grains lower their EU 2019 wheat crop estimate to 151.6mmt, down 1.1mmt on last month. 19/20 carryover also reduced to 14mmt - 16.2mmt previously.
Russia announce intervention wheat price at $185/tonne, similar to the internal equivalent of current new crop fob offers. Trade perception that the Russian Government is unlikely to buy a great deal of wheat presently.
US/China trade situation deteriorates further, with little sign of an agreement evident.
Brexit/Sterling developments continue to shape London wheat trading. Positive iterations of Brexit for grain markets still difficult to isolate.
Germany's DRV place 2019 wheat production at 24.29mmt, up 20% on last season.
Weather/Crop Developments
US Corn Belt planting circa 55% complete versus 80% average for this time of year. Forecasts for much of the main growing area is very wet for the next 2 weeks, particularly WCB. Up to 6 inches of rain expected.
As things stand, US analysts suggest this is on track for the slowest planting period on record. Given prevent plant dates are imminent and the forecasts continue to show heavy rains, up to a 5m acre switch to beans is being discussed as possible at this point. Current USDA yield projections of near record 176b/a also have to be called into question given the lateness of planting and poor conditions.
Bottom Line
US Corn Belt weather the major focus this week, as the corn planting situation continues to worsen, with forward forecasts providing little optimism. The heavy sell off of the last month, combined with the large spec fund short, likely also contributed to the strength of the rally. Wheat trade continues to follow in the coattails of corn, absent any supportive news of its own to speak of.
Short term, its difficult look far from US weather for grain market direction. A change in pattern could mark another sell-off, whilst further rains would point to additional risk premium.