Wheat higher and oilseeds steady to stronger in overnight trading.
Wheat markets continue to speculate over the extent of US demand, with more reports of sales making the rounds. Egypt’s buying agency GASC is tipped to soon return to the market, given its apparent funding improvement which should cut several dollars in costs and may reopen interest in the tenders from US trading houses, which are normally loath to tender close to a market rally. Any GASC tenders will be watched as an indicator of the depth of Russian wheat availability in light of its government’s talks of export restriction talks, and a flag for how much demand can shift back to the US in coming months. At current values, we should see close competition between EU and Black Sea offers, with the US at a slight premium, given the strength in basis and futures.
Saudi Arabia’s SAGO remains missing in action, even as Jordan buys some slightly discounted barley for new-crop shipment.
South American weather concerns have reemerged, with little to no rainfall on the two-week outlook to help bean crops in Brazil, and more showers forecast where they are not needed in Argentina. Some crop ideas are getting cut in Argentina as the market continues to evaluate the early January flood impacts, offset by good conditions in some of the less-saturated areas. Bean demand estimates for China are being thrown around, but still appear to be entirely a political problem for now.
Similar concerns are emerging on Canadian canola, in light of the Canadian Government’s intention to allow the US to extradite a Huawei executive.
Meanwhile, Informa was calling for new-crop year-on-year US corn area to be lifted by only around 1 million hectares, and beans to be down by around 1.2m ha.
With the ongoing trade war crushing the bean balance sheet, many have been expecting larger switches. Corn is already being planted in south Texas, but for most of the corn belt, crop-insurance prices are yet to be set and finalised planting intentions are many weeks away.
Later-planted sorghum in Queensland and northern New South continue to suffer in the heat and continuing dry, and some crops are shriveling as their yield prospects slide.
Source: Lachstock Consulting