Headlines:

  • World wheat stocks to hit record high at close of 2017-18, says IGC
    The International Grains Council lifted its forecast for world wheat stocks to a record high as it reversed a downgrade to its global grains harvest estimate, flagging an “increasingly favorable outlook” for Black Sea output. The intergovernmental group lifted by 7m tonnes to 248m tonnes its forecast for world wheat inventories at the close of 2017-18, ditching expectations of a decline from the all-time high of 244m tonnes recorded for the end of last season. “For wheat, record opening stocks [to 2017-18] will more than compensate for the smaller harvest, boosting overall supplies to a new peak,” the council said. While strong stocks typically signal weak prices, meaning less competition for supplies, the IGC offered some solace to wheat bulls in estimating stocks in major exporters at 69m tonnes at the close of 2017-18, an upgrade of 4m tonnes, but down 8m tonnes year on year. Inventories in major exporting countries, in being readily available to the market, are more influential in setting world prices than stocks in the likes of China. “China’s wheat inventories are set to post another strong gain,” the IGC noted.
  • Sugar prices gain, as Brazil tax move spurs talk of political favor
    Sugar prices extended their revival, returning above 14 cents a pound at one point, after Brazil unveiled a 20% tax on Brazil’s ethanol imports, in the latest of a series of moves by the top producing country of the sweetener deemed potentially positive for values. Raw sugar futures for October stood 2.1% higher at 13.95 cents pound in midday deals in New York, taking close to 8% the contract’s revival from a mid-month low. Earlier the contract touched 14.06 cents a pound. London-traded white sugar for October was 1.8% higher at $381.30 a metric ton, up by approaching 6% from mid-August lows. The latest gains followed the announcement overnight by Brazil’s farm ministry that the country’s foreign trade chamber, CAMEX, had approved a 20% levy on ethanol imported above a tax-free quota of 600m liters a year. The move was viewed as, in curbing prospects for imports – which have reached 1.8bn liters over the past 12 months, and are growing fast – boosting prospects for domestic output of the biofuel, meaning higher prices of sugar if the sweetener is to secure an adequate supply of cane.

Summary:

Soybean futures found some legs today which in turn seems to have pulled Wheat and Corn along for the ride. Corn was only up 0.25 to 1.00 cent while Soybean took top honors gaining 6.25 to 8.50 cents. Reports from the Crop Tour Nebraska and Illinois findings showed fewer than expect Soybean pods. That was enough to propel the markets into a small rally. In our weekly market updated, we pinpointed August 24th– 28th as a potential window of opportunity for the Wheat market to post a small turnaround. If it is able to hold it gains we think that it may continue to move sideways to up through the early part of September.

Today’s USDA Weekly export sales report showed strong demand for Soybean with it crushing trade estimates at 1.6 million metric tons. Wheat and Corn were at the low end of expectations coming in at 386,400 metric tons for Wheat and 525,700 metric tons for Corn.