- Markets rally sharply on the week as risk premium is built for challenging crop conditions in parts of US, SA and Black Sea.
- · US weekly exports reported at 1.9mmt for corn, well above market expectations. Wheat underwhelmed with just 328k reported (450k/week required to meet current USDA targets).
- · US funds estimated net short 52.8k (wheat), long 210.9k (corn) 124.3k (soybeans).
- · Saudi Arabia buys 545tmt wheat – believed to be German/Baltic origin. Iraq also announces a tender for 50tmt wheat from US/AUS/Can origin.
- · Ag Rural cut 17/18 Safrinha Brazilian corn production by 4.5% to 57.2mmt. Total corn output placed at 87.6mmt (USDA 92mmt).
- · Stats Canada suggest Canadian farmers intend to plant 25.3m/a total wheat area 2018 (up 12.8% on this season).
- · Sterling will be closely monitored this week - BOE interest rate meeting scheduled for Thursday 10th .
- · AHDB data shows UK barley usage in animal feed production of 934tmt, up 20.9% on this time last year.
WEATHER/CROP DEVELOPMENT
- · US Corn Belt planting progress increased to 39% complete (above most trade estimates). 44% the 5 year average.
- · Forecasts for the week suggest light rains are to be followed by heavier towards Friday, potentially hindering field work. Prevent plant dates are 2/3 weeks away, so there still appears a good opportunity for the crop to be planted.
- · Kansas Wheat Tour estimated average yields at 37b/a versus 48b/a last year and a 5 year average of 41b/a.
- · US winter wheat plantings improved by 1% to 34% g/e
- · US spring wheat planting progress increased from 10% to 30% last week (51% average for this time of year). Forecasts for the Northern Plains suggest some rains over the next 2 weeks, though not of enough severity to hinder plantings.
- · Argentine Corn harvest delays continue, with wet weather expected for much of this week. Extended forecast do suggest drier conditions are upcoming however.
- · Ukraine corn planting progress reported at 63% complete versus 53% this time last year.
- · Southern Russia/Ukraine continue to look hot/dry for the next 2 weeks, with little change evident in the extended outlooks for May.
BOTTOM LINE:
- · Market strength continues as ongoing weather issues in US/SA/FSU provide enough doubt around 2018 supply to justify additional risk premium.
- · USDA data due for release on Thursday will be the next fundamental target for the trade. Risk of consolidation pre-report is a possibility given the extent of the recent rally, also bearing in mind the sizeable longs in corn/soybeans.
- · That aside, US/FSU weather will likely continue to be the key drivers day-to-day, with the ongoing US/China trade situation also likely to be monitored for developments.
