Friday’s wheat futures markets closed weaker while corn firmed a little
The US government will be “temporarily” back up and running as of Monday (US time). If we don’t see a longer term political deal there may be another shutdown coming in three weeks, but in the mean time that means business as normal for the USDA. There’s been no official commentary as of yet as to when each missed report will be released, but based on unofficial discussions it appears that the smaller reports will likely take 2-4 days to get moving. Assumedly we’ll get an official schedule early this week – and hopefully some clarification as to whether the Jan WASDE and production reports will be release or simply rolled into the Feb report (scheduled for Friday the 8th).
The latest “polar vortex” is pushing down across the Midwest – most of the HRW belt is outside of the extreme cold but there are parts of the SRW area in southern Illinois/Indiana/Kentucky. We’re on the watch for some volatility this week when the USDA will (assumedly) release their delayed winter planting report – trade expectations have consolidated around another year of ongoing reduction to winter wheat acres (after initial ideas for an acreage expansion were tempered with poor planting weather in parts of the southern plains). Export sales confirmation (or denial) will be the second piece of the puzzle – helping define the extent of business shifted to the US already. US Wheat Associates has claimed that there was one boat inspected to China last week (which should come through in released inspections this week) – but the question will be how many more have been booked and if there’s any truth to the 7 million-tonnes-type rumours.
Meanwhile, Russian exports continue to slow down – though one analyst group there was pushing a higher export forecast on the basis of their estimates to local supply, the reality is still that available supplies are drying up (and prices continue to gradually rally as costs of origination go up). We haven’t seen GASC yet, but if they come back this week at current prices we should see EU and US wheat both within competitive levels (depending on how risk premiums and the new payment arrangements work out). Ag Canada was out last week calling for total new season wheat acres there to be up ~9% (with the majority of that switched out of durum) and canola acres nearly unchanged.
A survey of farmers in Brazil called total production losses there some 15 MMT of soybeans – perhaps aggressive given the source, but reflective of ongoing crop downgrades as harvest continues to pick up pace and yields disappoint. Exports shipments are picking up pace there though, and there are questions about whether we will see any continuation of the recent bean export pace from the US. As with wheat, export sales reports should be back out from the US this week, giving some guidance as to exactly how many Chinese sales were booked earlier this year (and how much was purely rumour).
We still don’t have any moisture on the radar for the Downs/N NSW sorghum fields. Significant damage has already been done in many areas, and crop ideas continued to get re-evaluated even with some more quiet track markets going into the long weekend.
Source: Lachstock Consulting