Post Market Wrap Up May 7
May 7, 2018
Post Market Wrap Up May 16
May 16, 2018

Post Market Wrap Up May 9

Headlines:

  • Wheat shows definite direction, downward, amid timid market
    Calm before the storm? Thursday will bring a monthly US Department of Agriculture Wasde crop report which will be a big one, bringing the first full crop supply and demand forecasts for 2018-19, which could be somewhat bullish for, say, corn. Market expectations are for the data to show US corn stocks at the close of 2018-19 at 1.628bn bushels, down 550m bushels on the expected inventories at the end of this season (in August). For wheat too, the Wasde is expected to show in fall in US stocks next season, to 930m bushels, from the 1.065bn bushels at the end of 2017-18, which ends this month for the grain in the US. (June is a more typical season-end month for wheat.) For soybeans, however, US stocks are expected to remain elevated, at 535m bushels at the close of 2018-19, down only 6m bushels year on year. But, as often in pre-Wasde trading, there were jitters, which in early deals on Wednesday kept prices pretty much in check. And this when investors are trying to balance out a range of other influences too, notably weather for spring sowings in the northern hemisphere, and winter seedings in the southern hemisphere, which has been less than ideal. However, on the demand side, there are worries too, notably in terms of trade, and the impact of worsened China-US relations, which is overhanging the soybean market in particular.
  • Nutrien flags ‘tremendous opportunity’ in Brazilian farm retail market
    Nutrien heralded expansion in the Brazilian farm retail market as it seeks to spend a $4bn-5bn windfall from the sale of stakes in other fertilizer groups, flagging a “tremendous opportunity to create some value”. The Canada-based fertilizer-to-agricultural supplies group – which, besides being the world’s largest potash producer boasts 1,500 farm retail locations worldwide – said that I would have $6bn-8bn of capital “to allocate” over the next three years. Sales of minority shareholdings in Chile-based SQM and Arab Potash Company, besides the cash already raised from the sale of shares in Israel’s ICL, “will generate… somewhere between $4bn and $5bn of cash”, said Chuck Magro, the Nutrien chief executive. On SQM and Arab Potash, “I’m hopeful that we will have transactions to announce by the end of the second quarter in both cases”. Combined with deal synergy benefits from Nutrien’s formation, as a merger of Agrium and PotashCorp, and extra cash thrown off by its operations, would get to the $6bn-8bn figure.

 

Summary:

Corn was mostly quiet ahead of the USDA WASDE report tomorrow. Expectations are calling for 2017-18 carryout average around 2.178bb and 2018-19 estimates at 1.628bb. Export sales estimate for tomorrow rests at 700tmt to 1.0mmt for 2017-18 and 50 to 300tmt for 2018-19. Soybean futures posted a modest loss of 4 cents. Estimates have the average 2017-18 US carryout estimate at 541mb and the 2018-19 carryout estimate at 535mb. A Chinese trade delegation will visit Washington DC next week for more trade negotiations. CELERES raised its Brazilian production estimate 2.1mmt to 117.8mmt. Export sales estimate come in at 300 to 600tmt 2017-18 and 100 to 300tmt 2018-19. Wheat has effectively surrendered the gain from last week after a 4-cent loss on the day. Export Wheat sales estimate come in at 0 to 350tmt for 2017-18 and 200 to 350tmt for 2018-19.