- The latest US crop condition and progress report showed winter wheat condition as 42% good/excellent, which is unchanged week on week, and compares with 34% last year and the ten year average of 49%. Perhaps more surprising was the percentage of corn planted, which was reported to be 9% compared with 2% last week and below expectations of 10% and the ten year average of 12%. More encouragingly was the spring wheat planting update at 36% planted compared with 17% last week, 9% last year and the ten year average of 17%.
- In a more esoteric comment it is noted that El Niño conditions are reported to be developing rapidly in the equatorial Pacific whilst cooling is impacting the Atlantic. The combination of these two conditions suggests, quite strongly, against a dire 2015 US Midwest drought, and points towards a second year of trend or above trend yields in corn and soybeans. Consequently any weather related price rallies in the spring planting period should provide a selling opportunity and should not be chased by buyers.
- The spread of bird flu through the US poultry flock is reported to be accelerating at an alarming rate! This is adding concern for US domestic soybean meal demand. On Monday, Wisconsin declared a state of emergency and called up the National Guard to help clean infected farms in order to contain the disease. Iowa reported that 5.3 million chickens are infected. Migratory birds appear to be spreading the virulent flu through US poultry flocks at a rapid pace and the fear is that nearly every US state could be infected by the end of spring. By way of note, the US poultry industry is the largest consuming species of US soymeal.
- Argentina has authorised the export of an additional 3.5 million mt of the 2014/15 corn crop, which is in addition to the 8 million mt already authorised late last year. Argentina has always restricted corn and wheat exports to ensure sufficient stocks are available for domestic consumption, however (maybe cynically) it appears that export tax revenues are more important at this time for the cash starved government!
- Russian domestic wheat prices are falling due to increased farmer selling, which has been driven by the farmer’s requirement for cash to allow spring planting as well as generally high stocks. FOB Black Sea 12.5% protein wheat was reported to be offered at $193, which is some $14 lower than a week ago. Spring plantings have been delayed by recent cold conditions, with some 2.6 million ha planted, 8.5% of the planned area and below last year’s 2.9 million ha. Offsetting the spring delay is the good condition of winter grains and good soil moisture levels, particularly in Siberia.
- Stratégie Grains have raised their estimate of 2014/15 EU wheat exports to 32.1 million mt following recent weeks high export volumes. This is slightly behind the USDA’s most recent figure but still points towards ongoing high volume weekly exports.
- Chicago corn and soybeans ended lower whilst wheat saw a bid on the back of short covering following the crop condition update which did not improve. Corn in particular and soybean markets feel bearish not least on the back of the US bird flu situation. The overall impact is difficult to gauge but the trade is not liking reports of huge slaughter numbers and the US’ apparent loss of export share. Bird flu is now a bearish market fundamental. The longer term view for wheat’s latest rally looks limited given favourable US and world weather.