Weekly Grain Digest - 16/04/2019

The COFCO UK Weekly Digest brings together a wealth of global grain intelligence to summarise this week's market drivers for grains and oilseeds.

Grain

Lack of Fresh Fundamental News
Lack of Glabal Weather Issues
Rebound in 19 Crop Global Wheat Production
Market View:
Globally, markets continue to lack fresh fundamental news and futures have become stuck in a relatively narrow trading range. They need something new to push them out of this which in the short term is most likely to come from weather or US/China trade developments.

On the weather front, however, there is nothing really dramatic going on at the moment.  Most areas of the EU and Black Sea that had been showing signs of dryness have actually received some beneficial rains recently with more forecast. In the US, wet weather is a mixed blessing as whilst it provides good soil moisture conditions for the HRW wheat crop, its causing delays for early corn and spring wheat planting.

Yesterday’s weekly US Crop Progress & Condition report showed winter wheat rated unchanged from last week at 60% Good/Excellent. To put this into perspective, the 5 year average is 44% whilst this time last year the crop was only rated at 31% good/excellent. Spring wheat planting progressed 1% during last week and is now 2% done, this compares to 3% LY vs against a 5 Yr average of 13%. Although corn planting is slow, it is now 3% complete which is the same as this time last year and slightly behind the 5yr average of 5%.

At Friday's GASC tender Egypt bought four cargos of wheat (3 Romanian and 1 Ukrainian). US wheat proved to be too expensive and was at least $7 out of contention. There were no offers of French wheat due to a cargo being rejected earlier last week for ergot.

Estimates for this coming Russian wheat harvest keep increasing with SovEcon agriculture consultancy raising its forecast to 83.4 million tonnes from 80 million tonnes as a result of strong plantings and good crop conditions in the majority of regions. SovEcon also raised its overall grain forecast to 129.1 million tonnes from 126.1 million tonnes. We’ve seen further talk of increased crops this week with German farm cooperatives forecasting Germany’s 2019 wheat crop will rise 20.6% to 24.4Mmt.

In the UK domestic market, trade is slow with consumers only buying what they have to as they expect the big inverse to new crop to erode soon. The recent Brexit extension, however, has enabled a handful of old crop barley cargoes to trade which should help put a bottom in old crop barley prices for the moment.