Prices 10/8/18

Category:

US weekly export data came in at the expected range so offered little support to the futures markets. With a USDA report due out tonight CBOT generally saw trade positioning resulting in lower volume and weaker prices by the close across most grains.
I was starting to think this market was shaping up like a “buy the rumour, sell the fact”, kind of market but with the slight adjustments seen overnight I’m a little more confident the market will reflect the USDA data more closely. At the end of the day the market does what the market does though.
The punters are all having a stab at the USDA numbers. The general feel is a cut of anything greater than 5% to global wheat output year on year could push wheat into a sharp rally. In June this year the USDA pegged global wheat production at 744.69mt, in July the number was reduced to 736.50mt, a fall of 1.1%. Year on year the July estimate is a fall of  just 2.83%. So in order to see the rally these punters are talking about the USDA wheat estimate would need to come in at sub 720mt.
Looking at the July production estimates and adjusting the data to what many of the recent production estimates from ground staff and agronomist are it’s hard to see an adjustment any greater than about 2.7% month on month. A 2.7% move would indeed lower world production bellow the 720mt figure that the punters are saying is the trigger point, in fact it would lower production to about 717mt.
A 720mt production number will still see a global stocks to use ratio above 30% though, not exactly a low number historically.
Will the USDA do it, well food inflation has started plenty of wars and the USA seem to be itching for a blue of late.

TAGS: