Lunar New Year is expected to keep the Asian side of the global grain market quiet this week.
Much of the hype over the last week or two has been on the back of US / China trade negotiations. The fund money seems to be more interested in picking the bottom in crude oil with the punters still happy to hold their month long positions.
US soybeans and corn futures will benefit from any upside in crude but we also see strength coming from the problems unfolding in Brazil. The big news will be just how much US grain has the Chinese agreed to buy.
US wheat futures are finding support from the chance of winter kill from last week’s big freeze in the states. If US export sales meet USDA projections wheat is technically in a position where it could move either way as it is now just a tad overbought. Weekly US wheat export inspections were reported at just over 440kt. This is an improvement but below the 590kt needed to hit USDA targets.
As domestic wheat values in Russia continue to climb we see US wheat becoming more competitive into the Middle East and Asian markets. Mexico was their biggest weekly importer last week. Russian values in Rubles per tonne are pushing past records. As we move out of winter and into the Russian spring producers will need cash & domestic grain prices are expected to plateau or decline slightly prior to the new crop arrival. In US dollars per tonne Russian wheat values are not so high though and are instead close to or still just under the 15 year average. If the ruble was to gain in USD value if could well reduce the domestic price sharply. Prior to US sanctions the US dollar could buy between 30 – 35 ruble, since late 2014 that number increased sharply to about 65 +/- about 15.