Weekly Grain Digest - 10/06/2019

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

US Corn Plantings
Global Wheat S&D
Black Sea Competitivenes
Market View:
The dominant market driver remains the US corn plantings which is still creating a great deal of price volatility. Last week, futures markets gave up some of their recent gains as US weather forecasts turned drier, or at least less wet.

Overall the US corn picture remains totally unclear with plantings figures still very much up for debate. Tomorrows (Tuesday 11th June) USDA report is unlikely to provide any real clarity and so markets are likely to continue trading rumours and forecasts until the following USDA report on June 28th.

On its own, the global wheat S&D still looks negative for prices with no real supply issues. Harvest is fast approaching in the Northern Hemisphere and it would take a significant weather issue to disrupt crops at this stage and that looks unlikely at the moment. EU wheat continues to look expensive against other origins, in particular cheap offers from the Black Sea. Unless dynamics change EU prices will have to come lower to access export markets.

In the UK, wet weather over the weekend has helped crops and further rains this week will continue to improve the UK’s prospects. Much like in the EU, however, we will need to compete more aggressively on exports to ship our surplus. Currently the UK has no harvest wheat export sales in the book in part due to Brexit but more so due to the lack of price competitiveness.  

Sterling has remained toward the bottom of its recent range circa 1.1215 v’s Euro, and now the intensifying Tory leadership battle will do little to add confidence. Sterling however is not the real reason we are too expensive and flat prices will have to move lower before it becomes a relevant factor in the market. Brexit of course remains a significant problem for UK shippers with the October deadline still a stumbling block to forward trade.