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Market Report 9th August 2019

Range bound trade this week as all eyes turn towards USDA.

  • · US/China tensions continue. Mounting fears amongst economists that the conflict will lead to a Global recession if a resolution cannot be found. Since the dispute began, US exports to China have fallen by $33 billion (21%), whilst Chinese exports to US have grown by $4 billion (1%). Poor relations here will remain a negative for Ag markets.

  • · Egypt's GASC buys 300tmt wheat (Romanian/Ukrainian/Russian origin).

  • · Saudi Arabia reportedly increase their tolerance for 'bug damage', something which has previously restricted them from buying Black Sea supplies. Largely expected to tender for wheat within the next few weeks.

  • · US weekly export sales weak for corn, strong for wheat. 240k and 488k respectively.

  • · CONAB increase Brazilian corn crop forecast by 800tmt to 99.3mmt.

  • · US funds estimated net long 68k corn, short -76k soybeans and -15k wheat.

  • · Sterling firms on suggestion that MP's may have options available to block Boris Johnsons 'No Deal' Brexit plans. The pound hit a 10 year low against the Euro briefly before the rally however.

  • · UK physical markets heavy with good wheat yields reported to date. In light of the likely surplus, exporters may well come under pressure to get business done before the Brexit deadline in October, in case of a 'No Deal' and the consequent WTO tariffs.

Weather/Crop Developments

  • · US Corn Belt weather largely unthreatening, though more rain in parts of Iowa will be required.

  • · UK winter barley harvest circa 50% complete. OSR 30% and wheat less than 10%.

  • · French wheat harvest 87% complete, barley 92% complete.

  • · BAGE report Argentine wheat planted now complete at 6.6m/h. This would amount to the largest area in 20 years.

  • · 88.6% of the Argentine corn crop rated good/fair. Last season 66% was rated poor/very poor. Harvest now 80.2% complete.

Bottom Line

  • · USDA reporting this evening the central focus for the trade, with the US corn numbers of particular significance.

  • · Little change to the Global weather outlook, with no major issues to suggest supply problems are imminent. Something which, in conjunction with comfortable wheat stocks from last season, continues to act to restrict market upside.

  • · Domestic market continues to be Brexit/Sterling lead, though with a negative bias due to ongoing harvest + large wheat surplus expectations.

  • · In short, look for USDA to set the tone for the coming weeks, with any rebound likely to be perceived as a further selling opportunity.

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