Markets close higher after a volatile week. US/China’s trade war escalation prompted sharp selling, before attention returned to problematic US wheat/corn and SA forecasts later in the week.
- China announces intention to levy reciprocal tariffs of 25% on 106 US products, including soybeans, leading to a sharp sell-off (down $18/t at one stage). $100 billion of further tariffs is reportedly being considered by the US in retaliation.
- US funds estimated net short 61.6k wheat, long 200k (corn) and 134k (soybeans).
- EU soft wheat exports reported at 14.5mmt for the season (down 25% on the 19.4mmt shipped by this time last year).
- Russian Ag Min suggest that they will not raise the wheat export duty for the 18/19 season – implying expectation of another strong export season.
- Ukraine suggest they expect their 18/19 corn and wheat production to reach at least 24.1mmt and 26.1mmt, in line with this season, in spite of delays to spring plantings.
- BAGE lower Argentine soybean crop estimate by 1.5mmt to 38mmt, down from last year’s 57.8mmt (USDA currently 47mmt). Corn estimate left unchanged at 32mmt.
- Latest UK data shows animal feed usage up 24.7% on barley for this season to date. Wheat usage in animal feed reported up 2.6% for the season.
WEATHER/CROP DEVELOPMENT
- US Corn Belt forecasts cold/wet for the next 2 weeks – may cause delays to planting/field work.
- US HRW weather continues to appear dry in the extended forecasts, with freezing temps also expected intermittently. Northern Plains temps expected to be well below normal for the next 2 weeks, with snow showers likely.
- US winter wheat crop ratings placed at 32% g/e, 30% p/vp (compared with 51% g/e and 12% p/vp last year).
- BAGE report Argentine corn harvest 21.6% complete (18% last week). 78.1% of the crop rated poor/very poor, up from 76.4% last week.
- Argentine forecast show unfavourable rainfall for the next 10 days.
- Central/Southern Brazil expected to remain dry for the next few weeks.
- French wheat conditions rated 78% g/e, unchanged on the week (85% this time last year).
- Australian wheat area remains dry with rainfall levels below average – potential for better moisture in the 7-10 day models however.
BOTTOM LINE:
- US/Chinese developments keep the trade on edge, with little clarity as to what the final outcome of the tariff trade-off will mean for Ag products as of yet. Principally the trade expects soybeans/corn to be more affected – though wheat would be expected to follow market direction.
- Fundamentals wise, USDA’s latest stocks and plantings report is due on Tuesday, whilst US HRW dryness and Corn-Belt planting delays should continue to occupy much of the trade focus in the interim.
- US/SA weather is likely to provide underlying support to markets
