Market Report 26th July 2019

July 30, 2019

 Markets edge lower as Global harvest pressure weighs.

  • Sovecon reduce Russian wheat crop to 73.7mmt, down 2.9mmt on their previous forecast.

  • Russian exports estimate for next season reduced by 6.2mmt to 31.4mmt (July USDA 34.5mmt).

  • Soufflet estimate French wheat crop at 38-39mmt, whilst French Gov estimates 37mmt - Strategie Grains suggest 38.2mmt.

  • US funds estimated net long 144k (corn), short -43k (soybeans) and -15k ch+ks wheat).

  • US weekly export sales (old +new crop): 508k (corn), 660k (wheat). Corn sales will need to improve to reach current USDA targets.

  • Sterling continues to fall as No Deal Brexit rhetoric grows - strengthening London wheat. Pound has lost 7% of its value against the dollar since May.

  • Some suggestion from the US that ethanol plants may considering slowdowns or shutdowns as a result of poor margins.

Weather/Crop Developments

  • Dry US Corn Belt conditions cause for concern with little rain relief anticipated this week. Parts of Iowa and Illinois in particular will be closely monitered given low soil moisture.

  • European harvest progressing well. French wheat harvest circa 63% complete, German circa 70%. Quality reports have been good.

  • Record high temps across parts of the EU may have been too late to impact wheat crops, corn crops however are suspected to have been affected.

  • Ukraine wheat harvest est. 76% complete. Quality across much of the Black Sea reported to be good.

Bottom Line

  • Little change to the bigger picture as the trade continues to weather watch. Wheat supply domestically and globally is forecast to be abundant - providing little buying incentive. Uncertainty around US corn remains supportive to wheat, with all eyes likely on USDA's Aug 12th report for better clarity on this.

  • UK wise, harvest pressure will continue to restrict upside, whilst Brexit/Sterling will continue to trade as a fundamental to daily direction.

  • Expect further volatility as US Corn Belt weather in partiular continues to draw the focus ahead of USDA










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