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CBOT Market Report

W/e 10/02/17 -- Soycomplex: Beans closed higher on the day and for the week. The market was buoyed Friday by the announcement of 140 TMT worth of US soybeans sold to unknown for 2016/17 shipment. In their latest WASDE report the USDA were unchanged on their outlook for Brazilian soybean production this year (104 MMT), but lowered Argentina by 1.5 MMT to 55.5 MMT. They also reported US soybean export commitments so far this season at 51 MMT, a 21% increase year-on-year. This is also only 4.8 MMT away from it's current forecast for full season exports of 55.8 MMT. In other news China reported that they'd imported 7.66 MMT of soybeans in January, 35% more than last year. In Brazil, IMEA reported the soybean harvest 45.8% complete in Mato Grosso, versus only 25.6% done at this time last year. Mar 17 Soybeans settled at $10.59, up 8 1/2 cents; May 17 Soybeans settled at $10.70, up 8 1/2 cents; Mar 17 Soybean Meal settled at $342.10, up $3.70; Mar 17 Soybean Oil settled at 34.61, down 06 points. Mar 17 beans were up 32 cents compared with last Friday.

Corn: The market closed higher on the day and versus last Friday. In Chicago the Mar 17 contract closed at the best levels on a front month since late June 2016. The USDA this week raised their estimate for the size of the global 2016/17 crop by more than 2 MMT to 1040 MMT. However they also upped consumption by 6 MMT and cut carryout by 2.5 MMT. Chinese corn usage was projected 4 MMT larger, mostly from increased feed usage. The USDA also reduced the size of this season's EU-28 corn crop, marking that down to 60.3 MMT, with ending stocks cut to 4.75 MMT, the lowest level since 2007. Record corn production for 2016/17 reflected larger crops in both Ukraine and Mexico more than offsetting lower production in the EU, they said. "Robust demand in both Iran and Vietnam support a higher volume of global exports. Moreover, a smaller barley crop in Iran boosts the demand for (other) imported feedstuffs," they added. Mar 17 Corn settled at $3.74 1/2, up 5 cents; May 17 Corn settled at $3.82, up 4 3/4 cents. For the week that puts Mar 17 corn up 9 1/4 cents.

Wheat: The wheat market closed higher, with Mar 17 CBOT Wheat settling at $4.49, up 5 1/2 cents; Mar 17 KCBT Wheat ending at $4.60 1/2, up 9 1/4 cents and Mar 17 MGEX Wheat finishing the day at $5.72 1/2, up 4 cents. For the week that puts nearby Chicago wheat up 18 3/4 cents, with the Kansas market 20 cents higher and Minneapolis up 14/14 cents. For Chicago wheat this was a more than 7-month closing high for a nearby contract. In their February WASDE report the USDA said that "prices for most wheat classes were up during the month of January, underpinned by 2017/18 US crop prospects as well as a weakening dollar." They also noted that "the growing gap between HRS and most other wheat classes is indicative of tight supplies of high-protein wheat in the global market." US 2016/17 wheat exports were raised 1.5 MMT to 27.5 MMT, whilst Russia's were lowered 0.5 MMT to 28.5 MMT. World ending stocks were lowered from 253.3 MMT to 248.6 MMT.

EU Market Report

W/e 24/02/17 -- EU grains closed the week with Mar 17 London wheat down GBP3.20/tonne from last Friday at GBP143.50/tonne, Mar 17 Paris wheat was unchanged on the week at EUR171.50/tonne, Mar 17 Paris corn was also unchanged on the week at EUR171.25/tonne and May 17 Paris rapeseed ended the week EUR13.00/tonne lower at EUR410.25/tonne.

A firmer sterling outlook, and the knowledge that UK feed wheat prices are already among the most expensive in the world, leans bearish for London wheat.

Paris wheat meanwhile remains in a sideways to modestly upwards trend helped by euro weakness which is fostering ideas that exports from other nations than France (such as Germany) will be more buoyant in the second half of the season than the market had been expecting.

EU soft wheat exports have certainly looked like they are slowing up this past couple of weeks though. Cumulative exports to date stand at 15.76 MMT, up by only around 81 TMT on a week ago, a net downturn of 11% from 17.642 MT at the same point in 2015/16. EU total all wheat exports for the full season are estimated by the USDA to decline 26.5%, so a second half downturn is certainly to be expected.

Trade attention is also starting to focus on 2017/18. According to the February issue of the JRC MARS crop monitoring bulletin for Europe, this winter is finishing with no major constraints to winter crops.

"Rain would be welcomed in large parts of southern Germany, southern Sweden, the Czech Republic and the Baltic countries, to restore soil water reserves and groundwater as spring approaches," they say.

"These regions have recorded a persistent rain deficit, with less than 10 mm of precipitation during the analysis period. Nevertheless, these dry conditions generally do not present an immediate concern for crops," they note.

"Frost-kill damage remains limited despite a persistent cold spell throughout January in central and eastern Europe, which has led to minimum temperatures of around -15°C, and reaching values below -20°C in many areas," they add.

Ukraine exported 28.65 MMT of grains in 2016/17 to February 22, report UkrAgroConsult. This volume included 13.33 MMT of wheat, 10.53 MMT of corn and 4.64 MMT of barley.

Egypt's GASC said that they'd signed an agreement to import 360,000 MT of Russian and Ukrainian wheat for Mar 21 - Apr 1 shipment. The cheapest Russian price reported was $196.50/tonne FOB versus $195.90 FOB for the Ukraine origin material.

The IGC were unchanged on their global 2016/17 wheat production forecast from a month ago at 752 MMT. They did however up corn output again, this time by 4 MMT to 1049 MMT.

"Conditions for 2017/18 winter crops in the northern hemisphere remained mostly favourable. Only a small fall in all-wheat harvested area is anticipated, but with a projected drop in average yields, the next world harvest is seen retreating by 2% y/y (year-on-year)," they added.

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