Market activity was quiet ahead of the USDA World Agricultural Supply and Demand Estimates report due out overnight. This report has historically been the appetiser before the more significant stocks and area data is released at the end of the month. The focus will be Russia and the EU wheat production, with SovEcon moving to 82 million tonnes (Mt) ahead of the report. It is easy to get lost in the data on this one, given how late the rainfall has been and where it has fallen. NDVI charts have something for everyone in them; against last year, southern Russia and south-western Ukraine look horrible, but there are other areas that are clearly outperforming. An analyst range of 73-82Mt is extremely wide for this time of the year, and markets will certainly react as we get some better clarity. We still have at least another month before we can start to quantify production, and in the meantime, the market has to decide how much risk premium is appropriate.

Egypt bought 120,000t of Russian wheat overnight at $227.25/t, around $7 higher than its last purchase at the start of the month, although this did not completely reflect the price change as there were some payment term changes in the difference. Unusual was the lack of other offers from the likes of France and Ukraine. It is easy to draw too much from this, given it was for a difficult shipment period between old and new crop.

On soybeans, the Chinese keep lifting US values as Brazil gets to the end of its marketing program. The market is sensitive to the volatile US-China relationship and the likelihood that Phase One will be adhered too. Given China has spent around 17 per cent of the Phase One pledge, it seems unlikely they will get there. More concerning is what the ramifications are of falling short.