Over the two past week, wheat prices found support mainly as its spread narrowed vs. corn, even if there was only limited support from the narrow spread during last week.
The majority of the support in wheat prices, indeed, was due to weather issues in Canadian and US growing spring wheat areas, potentially impacting its yield.
Forecasts for the growing areas continue to remain dry.
Drought concerns across the northern Plains of the US / southern parts of Canada remain topical for spring wheat and canola markets – although a storm moving across there is set to bring up to an inch+ of moisture to parts of south eastern Saskatchewan and North Dakota.
In any case, on the supply side, most of the northern hemisphere crop will be established in the yield-sensitive period between April to June.
Meantime, if bullishness of the corn complex will continue, it could potentially spill over also to the wheat values.
Corn prices higher on the back of lower than expected acreage estimates and continued robust export pace from the US.
The cash prices of corn, indeed, continue to strengthen, indicating a tight local carryout for the old crop as well.
In fact, the carry out for corn, could be lower than expect and close at one billion bu.
About wheat, on its hand, the size and flow of exports from the black sea will remain a major factor for prices in the coming months.
However, to note that remain the constant risk of long fund liquidation, that led price action due to its sizeable long position.
Meantime, soybean prices were unchanged over the last two weeks.
The WASDE report left the soybean carry-out estimate unchanged at 120 million bu.
However, we must note that the carryout was left unchanged by increasing the exports and reducing the domestic crush: which that, could be an unrealistic reduction in crush demand as crush margins in the US remain firmly positive.
Any adverse weather event would only push the new crop values significantly higher.
WASDE report figures out on Friday had US corn stocks at 1.35 billion bushels (bbu) versus ideas around 1.4bbu with the USDA finally pencilling in higher exports.
The 1.35bbu figure compares with 1.5bbu projected in March.
US wheat stock also was as expected, 852 mbu, although world wheat stocks were cut sharply to 295.5 million tonnes (Mt) but all of which was done in China through increased feeding estimates.
Consequently, remain to be seen how markets will ration demand back to fill continually emerging Chinese needs.
China’s agriculture ministry on Friday forecast 2020/21 corn imports at 22Mt up 12Mt from previous forecast and called for steady domestic prices there even if USDA’s 24Mt projection.
Brazil corn production is still estimated at 109 million tonnes, despite late sowing and climatic risks linked to a possible future water deficit.
Brazil soybean production estimate is raised to 136 million tonnes while that of Argentina is left unchanged at 47.5 million tonnes, despite lower expectations by the majority of analysts.
Against this general backdrop, the ratio was seen as neutral to slightly bullish in wheat and corn, and slightly bearish in soybeans.
Also on european market, it was again the weather that is at the center of concerns.
Risks of frost damage were notified in places, mainly relating to the most advanced crops from a vegetative point of view such as winter barley or rapeseed.
Damage has also been recorded on early sown spring crops such as malting barley or beets.
In any case, as of April 5, ie before the cold snap, FranceAgriMer had posted a wheat crop rating unchanged from the previous week at 87% from good to excellent, a litle improvement in winter barley, at 85% against 84% the week before, and also in spring’s barley at 92% against 91%.
Maybe, this crop rating will drop at the end of the week, after taking into account the cold snap of the past week.
Meantime, rapeseed prices continue still showing as much volatility with a decline in prices linked to a USDA report deemed to be bearish in soybeans and in the wake of canola even if 2021 harvest, showed prices that maintain high, in a context of fears of further downward revisions in European production.
From Black Sea basin, increased political tensions in the Black Sea region have yet to directly impact the grain trade, but concerns about the potential for violence there are raising the spectre of delays/interference in new season grain exports.
In add, in both Russia and Ukraine, a significant delay in spring sowing is still observed.
The Russian producers had sown on the eve of the weekend slightly more than 500,000 ha of spring cereals against already 2 Mha last year to date, while, in Ukraine, 600,000 ha of spring barley were sown compared to over 800,000 ha last year.
Aussie local markets remained fairly quiet to end the week, with a few localised demand needs still being bid up but overall low volume as we move into planting.
