Monday, 13 November 2017

Market Review 13th Nov 2017

Wheat markets trade sideways this week, as US corn makes new contract lows post USDA data, released late on Thursday.

  • USDA raise US corn yield estimates to a record 175.4b/a (174.6b/a last year). US carryover also raised 3.7mmt to 63.2mmt.
  • US corn demand remains strong for ethanol/feed/exports, though farmer selling is believed to be considerably behind normal.
  • Coceral place UK wheat crop at 14.79mmt, whilst Strategie Grain suggest 14.52mmt, significantly below DEFRA’s first estimate of 15.16mmt.
  • US funds estimated net short 129k wheat, 244k corn (near record).
  • EU Commission report wheat exports just over 7mmt to 7th November, 25% down on 2016. USDA estimate EU all-wheat exports at 28.5mmt for the season - appears too high on the current pace.
  • Sovecon increase Russian wheat crop estimate by 1mmt to 83.9mmt.
  • India increase wheat import tax from 10 to 20%. This is expected to largely impact Ukrainian exports intended for India – could consequently pressure international export markets lower as this wheat seeks an alternative home.
US corn harvest progress expected around 85% complete (70% last week). 7-10 day forecasts indicate largely unthreatening conditions for much of the Corn Belt.
Brazilian corn planting 49% complete (42% last week), whilst Argentine corn planting 65% complete (61% last week).
Argentine forecast look mild for this coming week, with scattered showers expected for Southern Brazilian growing regions.
Russian Ag Ministry report the grain harvest at 95% complete, whilst Ukrainian winter sowings are believed to be 95% complete and largely in good condition.
France AgriMer place winter wheat plantings at 90% (largely in line with the 5 year average).
Little bullish outlined by USDA in their latest update, with abundant supplies of corn/wheat evident Globally.
Northern hemisphere weather appears largely unthreatening for winter plantings, whilst SA harvest/plantings continue without major incident.
US fund shorts in corn/wheat are significant, though given the current bearish sentiment, it is difficult at present to identify the catalyst that would trigger major fund short covering.
On balance, failing a significant weather/currency event, markets may continue to feel pressure to erode, albeit gradually, over the coming weeks and months into the New Year.
Contact: GrainCo Ltd 0191 4287700