- CBOT markets have displayed some degree of “turnaround” following yesterday’s decline but there has not been any significant retracement suggesting that the bears are maintaining the upper hand in the battle for market direction.
- Yesterday’s crop condition and progress report showed corn to be 88% planted, as was the expectation, an improvement on the previous week’s 73% and in line with five year average. The crop is 60% emerged, a touch behind the five year average of 64%. Soybeans were reported to be 59% planted, better than anticipated, an increase from 33% week on week and above the five year average of 56%. The crop is 25% emerged, just behind the five year average of 27%.
- Winter wheat condition was reported as 30% good/excellent, a slight improvement (1%) on last week. The crop was also reported to be 44% poor/very poor compared with 42% last year. Spring wheat planting has progressed to 74% complete, up from 49% last week and compares with the five year average of 82%
- Interestingly, the correlation between crop development and yield is not as close as some might have us believe. The 2013 crop was slow to develop yet average yield finished above trend. In 2009 emergence of the crop was about the slowest in the decade but average yield hit a record high of 164.7 bu/acre. Conversely, 2012’s fastest planting on record led to severely depressed yield of 123.4 bu/acre, the lowest in 17 years. 2004’s early planting saw the second highest yield on record. What can we deduce from this, far from intuitive, information? Seemingly planting dates and early crop development are less important than pollination conditions, temperature and rainfall, which leads directly to the number and size of kernels on the ear.
- Midwest and southern farmers planted 25% of their soybean crop last week, boosting the national figure to 59%, impressive indeed, especially considering they were also finishing corn planting at the same time. As well as cotton and rice further south. The improved weather conditions, namely warmth and sunshine, saw close to ideal conditions that encouraged progress. Weather forecasts into early June look to be close to ideal with normal rains and temperatures; significantly, there are no reported threats from extreme heat or dryness into mid-June.
- EU and Black Sea conditions are, as we have reported, close to ideal and at this time we are looking to a record (or close to a record) wheat crop in the EU as well as a sizeable Black Sea crop. Exporters in the region are actively looking for business for early new crop sales (July and August) to open the traditionally aggressive August/October sales window. Prices have been in decline as sellers look to attract business, and we have seen reports that Algeria secured 700,000 mt of French wheat at $248.00/mt FOB, an extremely aggressive level which appears to be well below current replacement levels. Interestingly, the price is also below Black Sea levels, historically rare in a non FSU drought year. Supply pressures from within the EU look to be coming to the fore!
- Ukraine corn is becoming somewhat more aggressive in its pricing; since the political crisis which arose in March a price premium which made their corn uncompetitive has existed, and this now appears to be unwinding. However, buyers remain wary keeping “political risk” as an excuse to sideline – for now. The potential for Ukraine sellers to drop prices still further to attract business should not be ignored, and a window of opportunity may well be forthcoming.
- Egypt’s GASC is opening the negotiation doors as far as wheat quality standards are concerned, specifically citing moisture levels, which precluded French and other EU origins from competing since January when the moisture content of their imported wheat was fixed at 13%.
- Brussels has this week granted another big week of wheat export licences with 556,741 mt, which brings the season total to 27.991 million mt. This is 8.249 million mt (41.8%) ahead of last year with five weeks of the season left to go. Weekly corn imports were also high at 254,000mt, with a season total of 13.302 million mt, which compares with 9.988 million mt last season.