Headlines:                                                                                                     

  • Evening markets: Wheat futures set contract lows on both sides of the Atlantic
    Paris wheat futures set a fresh contract closing low of E159.25 a metric ton for March delivery, down 0.5% on the day (if above a low of E158.50 a metric ton reached earlier), and in decent volumes too. And Chicago wheat futures for March also set a contract low in late deals, falling 0.9% to $4.24 ¼ a bushel in late deals. While a surprisingly weak US winter wheat crop condition rating had supported futures in early trading, fresh evidence of the lack of competitiveness of the country’s (and EU) supplies was seen as undermining values. In a tender by Iraq, “Australian wheat was the cheapest offer, at $283.35-288.00 a metric ton, with the lowest US offer coming in at $294.47 a metric ton” on a cost and freight basis. And Egypt’s GASC grain authority again plumped for Russian wheat at its tender, 120,000 metric tons of it, at prices below $208 a metric ton, including freight.
  • Coffee prices may be poised for revival – for now
    Coffee prices could be ready to recover as the market negotiates a production deficit – but the gains may struggle to last long, according to Sucden Financial. The commodities broker pegged global coffee production for the current 2017-18 crop year at 154.4m bags, down from 156.3m bags last year, while consumption is expected to increase to 158m bags. The resulting deficit of 3.6m bags could lend support to coffee prices, which have been under consistent downward pressure for the last 12 months. Meanwhile, the net short in New York-traded Arabica coffee futures and options is approaching record highs, which could leave the market vulnerable to a rapid spike, Sucden said, flagging the potential for a weakening dollar to support price gains too. Greenback weakness against the likes of the real boosts the value in dollar terms of assets in which, in this case, Brazil is a major player. However, Sucden caution against expecting any longer term price improvements, anticipating “the dark cloud of a large Brazil crop to cap prices on the upside”.

Summary:

The USDA released its 2018-19 expected Corn planting figures today coming in at 91 million acres. That is up from the 90.4 million for the 2017-18 projection but below the 2016-17 94 million figure. The total expected production was 14.52 billion bushels. We have been looking for Corn to continue lower through the end of the month. We are close to 1st notice for the December contract so the heavy selling volume from today is perhaps due in part to rolling over positions to forward contracts. The December contract gave up 3 cents posting a new life contract low at 335.75. Soybean futures pushed lower initially but eventually found support off of its intraday low of 987.50. It rallied about 6 cents off of the low to close at 993.75. The USDA Soybean planted acres projection also came in at 91 million acres which eclipsed the previous record high of 90.2 million acres from 2017-18. The USDA projected US all-Wheat plantings for 2018-19 at 45.0 million acres (projected production at 1.815 billion bushels), down from 46.0 million in 2017-18. If this projection is realized it will be the lowest on record dating back to 1919. Wheat was mixed in trading today. December and March futures finished slightly in positive territory and the May contract was slightly lower.