A bearish theme pervaded the Ag markets for the past week on slow demand figures and an absence of any new bullish news. The US recorded a very lacklustre week of export demand, Russia upped its export outlook and forecast showers across Argentina has promised at least some respite.
The Chinese New Year was always going to provide a lull in the marketing year, especially one in which they have been such a dominant force. Now that the celebrations are over, it would be reasonable to expect an uptick in buying activity.
We are coming into an interesting time for the new season crops. The second tranche of the Russian export tax (doubling to US$60/t) will come into place mid March. Theoretically, it should be good for Australian FOB values. We are also coming into the period when northern hemisphere crops start breaking dormancy. A recent cold spell in Russia is not believed to have caused any damage (directly) but feet on the ground have noted ‘ice crusting’ – a physical layer of ice – which will need rapid warming to avoid problems. Fortunately for them, temperatures are seen to be rising this week, which will help alleviate the above issue, and will also speed up the pace of fertiliser application in the warmer, southern regions. Russian winter crop condition is seen to be improving, with recent guidance suggesting only 7-9% of the crop is in poor condition, compared with 22% seen as poor in December.
South America, while delayed, is making progress. In Brazil in the key agricultural state of Matto Grosso, soybean harvest was at 54% completed versus 84% last year and a 5 year average of 70%. Corn planting is at 55%, compared with 90% last year and the 5 year average of 80%. Wet weather in the north of Brazil is causing all sorts of quality problems in beans. Conversely, a dry February (40% of average) in Argentina with an outlook for a dry first half of March will keep questions buzzing around the state of the corn and bean crops there. A relatively wet January had revived hopes of an average crop, however, with crops approaching key production stages, a return to wet weather is required.
We know that you have to keep feeding the bulls if you want the rally to continue. China back from national holidays should help put demand back into the equation. In the next few weeks we will have an idea of how the winter wheats are looking and will hope to get a sense of direction from there.
The week ahead….
Snow and ice packs in the Northern Hemisphere will start to retreat giving us more of a glimpse of the condition of winter crops. Expect plenty of commentary to start coming out, especially in the US where freeze damage to the wheat crops will be closely scrutinised.
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.
Market pauses for breath
The Chinese New Year was always going to provide a lull in the marketing year, especially one in which they have been such a dominant force. Now that the celebrations are over, it would be reasonable to expect an uptick in buying activity.
We are coming into an interesting time for the new season crops. The second tranche of the Russian export tax (doubling to US$60/t) will come into place mid March. Theoretically, it should be good for Australian FOB values. We are also coming into the period when northern hemisphere crops start breaking dormancy. A recent cold spell in Russia is not believed to have caused any damage (directly) but feet on the ground have noted ‘ice crusting’ – a physical layer of ice – which will need rapid warming to avoid problems. Fortunately for them, temperatures are seen to be rising this week, which will help alleviate the above issue, and will also speed up the pace of fertiliser application in the warmer, southern regions. Russian winter crop condition is seen to be improving, with recent guidance suggesting only 7-9% of the crop is in poor condition, compared with 22% seen as poor in December.
South America, while delayed, is making progress. In Brazil in the key agricultural state of Matto Grosso, soybean harvest was at 54% completed versus 84% last year and a 5 year average of 70%. Corn planting is at 55%, compared with 90% last year and the 5 year average of 80%. Wet weather in the north of Brazil is causing all sorts of quality problems in beans. Conversely, a dry February (40% of average) in Argentina with an outlook for a dry first half of March will keep questions buzzing around the state of the corn and bean crops there. A relatively wet January had revived hopes of an average crop, however, with crops approaching key production stages, a return to wet weather is required.
We know that you have to keep feeding the bulls if you want the rally to continue. China back from national holidays should help put demand back into the equation. In the next few weeks we will have an idea of how the winter wheats are looking and will hope to get a sense of direction from there.
The week ahead….
Snow and ice packs in the Northern Hemisphere will start to retreat giving us more of a glimpse of the condition of winter crops. Expect plenty of commentary to start coming out, especially in the US where freeze damage to the wheat crops will be closely scrutinised.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: USDA, Reuters, SovEcon, Mecardo
Categories
Have any questions or comments?
Canola nearing 18 month highs
You can’t turn on the TV without seeing the latest developments in conflicts in the Middle East. The latest threat to Iranian oil production has
Welcome back Volatility, my old friend
Are we are witnessing a full blown fundamental rally, or a technical repositioning of short positions? The answer could be both, as one will lead
Localised production cuts unlikely to impact prices
Last week we received a query about the impact of dry conditions in southern cropping zones and the recent frost in the Riverina on the
It’s life Jim, just not as we know it
Are there signs of life in the wheat market? Wheat has struggled for direction in the past few months namely because of Northern Hemisphere harvest
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.