- It appears that Ukraine crops are at risk from frost over the next several days with temperatures reaching –20℃ in some areas as the current level of snow cover is insufficient for reliable protection of winter crops. Ukrainian farmers increased the area sown this season to 8.1 million hectares from 7.8 million last year. According to Farm Futures, U.S. farmers planted 34.8 million acres of winter wheat this season which would be the smallest area since 1913. All of the reductions came from hard red winter wheat as low profit margins have curtailed plantings in the Plains, and by way of comparison last year farmers planted 36.13 million acres of winter wheat. March Chicago wheat futures traded to a high of $4.19/bu yesterday which is the highest level since the December high. Declining winter wheat conditions in Oklahoma, Nebraska, Colorado and Kansas along with a weaker US$ added support to prices. The fund rebalancing that begins next week has also given the market support, as current estimates have the index buying at 35,000 contracts next week. The Ukraine 2017 wheat output could fall to 23.5 million mt down from last year’s 26.1 million and the USDA estimate of 27.0 million according to UkrAgroConsult. The market is doing its job, prices are dictating reduced plantings!
- Brussels has issued weekly wheat export certificates totalling 1.04 million mt, which brings the season total to 14.03 million mt. This is 52,076 mt (0.4%) ahead of last year. Barley exports for the week reached 164,246 mt, which brings the season total to 2.16 million mt, which is 3.44 million mt (71.4)% behind last year. Note that this week’s data reflects two weeks exports as no data was released last week due to Christmas holiday breaks.
- US export data is not available today due to the holiday break, and is scheduled to be released tomorrow.
- In Chicago the grains, corn and wheat are firmer today whilst soybeans are trading just in negative territory. March corn is testing December highs whilst March wheat has exceeded December’s levels and is pushing into November’s higher prices. Funds are covering short positions as prices push above key resistance levels with an upcoming USDA report looming, which some are fearing will contain bullish data. Price upside in soybeans will be determined by S American weather in the coming five or six weeks, and as we suggested yesterday, we could see funds adding to long positions across the soybean complex bolstering prices still further.
- There is some widespread debate as to the acreage losses due to excessive wet weather across N Argentina and the acute dryness across S Argentina. Some analysts are citing soy seeding losses of 1.0 million ha. Such a seeding loss would produce production losses in the order of 3 million mt. Others see seeding losses closer to 400-500,000 ha, which is about half of the prior estimate. Our best estimate at this timee is losses of 600,000 ha which could trim production to 54.5-55 million mt. This compares to the December WASDE forecast of 57 million mt. Perhaps the bigger question pertains to the continuation of the excessive rains and its impact on Argentine 2017 soybean yields.