- We have taken the time to put together an estimate for US and Word 2018/19 corn, soybean and wheat supply and demand. This is not official or connected to USDA numbers just our guess. We are using this until the US government shutdown is over and USDA catches up on release of delayed data/reports. US 2018/19 soybean carryout is 904 mil bu, World 114.36 million mt; US 2018/19 corn carryout is 1,694 mil bu, World 307.32 million mt; US 2018/19 wheat carryout is 987 mil bu, World 268.22 million mt.
- Maize usage in UK compound feed and integrated poultry units for the 2018/19 season to date is at a record high level according to AHDB. July to November usage stood at 209,500mt, an increase of 72,800 mt over the same period last year. November saw a 2% reduction if wheat usage. Total UK cereal usage was a shade over 2.7 million mt, an 82,200 mt increase year on year.
- Egypt’s GASC secured 415,000 mt of Russian wheat in their latest tender for late February/early March shipment. Despite Russian origin not being the cheapest offer on an FOB basis, freight differentials saw it cheaper on a C&F basis. Offers from a variety of origins ranged in price as follows: US, $239.00/mt; Russia, $248.00/mt; France, $251.93/mt; Ukraine, $253.75/mt; Romania, $255.50/mt.
- Sinking fob cash soy basis levels and the ending of the US/China Beijing Trade negotiations without any big announcement is pushing Chicago corn, soybean and wheat futures sharply lower this morning on sizeable fund selling. The decline is based on buy the rumour and sell the fact trading as the US/China push ahead in trade negotiations. And the Brazilian Jan 1 CONAB soy/corn crop estimates were not small enough to stoke fresh bullish enthusiasm. The US Government remains partially closed and the lack of US export sales data is causing market whipsaw. This is no place to be a seller in our opinion, and we expect some recovery in Chicago values heading into the close (and weekend).
- Chicago brokers estimate that funds have sold 6,200 contracts of wheat, 12,000 contracts of corn, and 7,200 contracts of soybeans. In soy products, funds have sold 5,100 contracts of soymeal and 4,500 contracts of soyoil.
- CONAB crop estimates plod and are adjusted up or down through May in terms of the soy crop. The most important time for Brazilian soy weather is from mid December into mid February. There is a good 4-5 weeks ahead of important Brazilian weather. We see the Brazilian crop between 116-117 million mt as of today, and it could slide to 111-113 million if the current adverse pattern were to persist into February 1. It is difficult to sustain anything more than a 1-2 day Chicago decline unless weather improves.
- Russia is slowly returning from the holiday, but domestic wheat prices are back to rising amid the increasing value of the Ruble and shortage of wheat close to export terminals. Domestic wheat values are either at or near record highs in European Russia. Cash wheat prices have also risen sharply in Siberia, but a Government program to subsidise wheat transport from Siberia to domestic users in the west has been dramatically cut in the latest Russian Government Budget proposal. This means that millers will strongly compete with exporters for limited wheat stocks in the western half of Russia. We look for the Russian cash wheat markets to overheat amid tight stocks/supplies.
- Traders will be looking to the next steps for US/China trade negotiations. It is expected that new details should emerge early next week with China to visit the US at a high ministerial level. The Lunar New Year starts on Feb 2 and China will be all but closed for some 10 days thereafter. Making progress before and after the Lunar New Year will be of paramount importance to extend the trade talks or come up to a conclusion with a binding agreement.
- The midday GFS S American weather forecast is little changed from the overnight run with below normal rain across NC Brazil while above normal rainfall persists across the northern third of Argentina. The pattern continues to reflect “stagnation”. The areas that are dry will get drier while flooding becomes a worsening problem for NE Argentina. The midday forecast calls for 0.25-1.50” of rain across Mato Grosso, Goias and MGDS over the next 10 days (10-50% of normal). A ridge of high pressure holds across NC Brazil stoking above normal temperatures as highs range from the 90′s to lower 100′s in NC Brazil. Flooding rains are projected for NE Argentina with totals of 6-10.00”. An estimated 20-30% of the Argentine crop areas are enduring excessive rainfall.
- The bulls needed to be fed (almost every day) and there just was not enough news to produce new buying today. A correction is underway in the complex which dragged down the grains. However, with world cash wheat prices scoring new 4-year highs this week amid tightening supplies, it is hard to be overly bearish of wheat. Corn is following soybeans awaiting fresh Chinese demand.