Weekly Grain Digest - 14th September 2018

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


US Corn Yields
Aus Wheat Crop Issues
US/China Trade Talks
Market View:
Wednesday’s USDA report was the main driver for markets this week with some typically unpredictable results.

US Corn was the biggest surprise where the market had been expecting a small reduction in yield but got the polar opposite. The USDA shocked traders by significantly increasing US corn yield from 178.4bpa to 181.3bpa which adds 6Mmt to world production for 18/19.

The soybean numbers were generally as expected with a record US yield which adds another 2MMt to global production and puts US stocks at record levels. Soybean futures, however, held reasonably steady after the report with supportive news that a new round of talks between the US and China had been proposed.

For wheat, where many traders feel that the USDA is over estimating production in the main producing countries, there was an unexpected negative surprise in the numbers. Although the Australian and Canadian crops were reduced (but still not by enough) the reduction was outweighed by a shock 3Mmt increase in the Russian crop following ‘excellent’ spring wheat conditions. This is at odds with reality where Russian spring wheat harvesting is actually being hampered by wet conditions.

Meanwhile, the possibility of Russian export restrictions still looms over the market. Although there is nothing new to say about if and when something might be put in place, there is evidence that Russian officials are trying to slow the pace of exports via tougher export quality controls. This tactic has been used in the past as an informal method of curbing shipments.

In other areas, the Canadian harvest is being hampered by untimely rains whilst the lack of rain in Australia continues to see wheat crop estimates decline.


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