Daily market report
19th September 2017
Chicago wheat closed lower yesterday, the forecast is for rain across most regions which will result in good soil moisture for winter wheat plantings. Wheat harvest is more or less complete now with corn harvest 7% cut and ratings 61% ‘good to excellent’ versus 74% ‘good to excellent’ last year. Wheat plantings are 13% complete, advanced from 5% last week. US wheat exports are running ahead of last year and ahead of USDA projections with last week’s export inspections at 464,000mt.
Weather elsewhere is causing some issues. Argentina has been very wet causing some to talk of lower yield expectation and a lower harvested area but drier conditions are forecast this week. Australia has the opposite problem with ongoing dryness and, in some areas, heavy frosts. The crop estimate is being pitched locally at around 19-20 million mt versus the USDA’s 22.5 million mt estimate. A smaller crop in either Argentina or Australia will result in lower export numbers.
Russia’s harvest is now 77% complete with the crop estimate remaining at a huge 89 million mt. Russian export prices have risen to a 5 week high as a result of a weaker ruble but exports are running 6.3% up on last year according to the Russian Ag Ministry. Ukraine is reporting very dry conditions with talk of soils too dry for winter plantings.
London wheat closed yesterday down £0.15/t at £139.20/t. Stronger sterling is pressuring UK values and keeping the UK out of export markets. Milling premiums, however, are nudging up again with good buying demand short term. This offers a good opportunity to growers with quality wheat to move this side of Christmas.
UK weather continues to be wet in most regions keeping land work a challenge. Scottish wheat harvest continues to make progress and has somewhere in the region of 30% still to go with quality looking more solid in northern England and Scotland than has been seen in the southern England.
We expect to find support today as sterling has dropped back against the euro, and Chicago overnight’s unchanged.
The Australian canola crop is suffering losses in the south east with continued dryness and frosts. We expect to see downgrading of the crop which will help support European prices. Australian crop ranges are still pretty wide, from 2.7myn mt to 3.5myn mt. Whilst current conditions prevail farm selling is likely to remain low.
Meanwhile, the Canadian canola crop has again shown remarkable resilience with trade expectations being raised to the higher end of recent production estimates (previous trade ranges were 18 to 20myn mt).
The US market is waiting to see how beans yields actually compare with the USDA number of 49.90 b/acre. First reports show a variance but there’s a long way to go.
The dry weather forecast for Brazil has been extended.
The outlook remains heavy in the oilseeds sector but this can change quickly if we see a sustained weather problem. Hence, markets are watching canola crops and Brazilian production.