Markets continue to trade sideways as the USDA reiterate bearish World wheat fundamentals once more.
- USDA increase world wheat crop to a record 755mmt, up 1.5mmt on last season. Stocks of 268mmt also a new record.
- Informa place US winter wheat plantings estimate at 31.1.m/a, down from 31.9m/a (32.7m/a last season). Of that, the HRW area is expected down 5% on last year.
- AgRural suggest Brazilian corn harvest this year will reach just 84.1mmt, down from last year’s 97.6mmt (USDA Dec est. 95mmt).
- Kazakhstan’s Ag Ministry cut their wheat export estimates by 1mmt for the season to 8mmt, citing increased competition from Russian exports.
- Russian Ag Minister suggests wheat exports could reach up to 40mmt this season (USDA est. 33.5mmt).
- France AgriMer reduce wheat export expectations to 9.5mmt, down 400k. Figure continues to appear high, with French supplies uncompetitive relative to Black Sea grain.
- Egypt buys 295k wheat, largely Russian origin. Brazil and Russia have agreed terms for importing Russian wheat, though this is not believed likely given the availability of cheaper Argentine supplies.
- US funds estimated net short 163.2k wheat, 237.2k corn
WEATHER/CROP DEVELOPMENT
- Dryness in the US Southern Plains remains closely monitored, particularly for any sign of colder temperatures and the potential for winterkill. 24% of the country has received insufficient rain. Some rains are forecast for the next 2 weeks, though not to greatly above average levels.
- The La Nina weather pattern, if sustained, could keep the Southern half of the US dry going forward.
- Argentina forecast for some rains, though more will be required to help mitigate the recent dry period if crop losses are to be avoided.
- French farm ministry place winter wheat crops condition at 95% g/e
BOTTOM LINE
- Little supportive to be found in USDA’s report on Tuesday, with abundant supplies of wheat and corn further illustrated.
- South American dryness remains cause for concern. Likewise lack of rain for the US Southern Plains and potential for winterkill will be closely monitored - particularly in light of the smaller wheat area.
- In light of the size of the US fund shorts in corn/wheat and the proximity to year/month end - short covering remains a possibility over the coming weeks. Though markets may struggle to sustain any rallies, absent supportive developments.
- Expect the range bound trade to continue as we move towards the festive period
