Russia is also clamping down on some of its own private export companies After kicking out
foreign-owned trading houses and seizing their assets, TD Rif – a major private exporter – has come to the attention of the Russian Ag
Ministry. Citing ‘phytosanitary inconsistencies’, the watchdog is threatening
to slash the company’s export quota and forcibly sell off their assets. It is thought this
might be an attempt to nationalise the wheat export market. It has the
potential to slow down exports which in turn could shore up prices. At this
point, it is assumed that other private traders will step in to fill the void.
By the end of the week, the wheat market has turned its attention to
the upcoming USDA report. The March stocks and acreage report can be a bit of a market mover. Expectations are for corn area to decrease by 3% from last year, wheat down by 4.5% and beans up by 3.5%. Recent history shows that trade guesses and the published data
can be miles apart which can lead to some pretty big moves in the market.
The weather market is also showing signs of ramping up. The forecast
for the Russian agricultural regions remains dry. While it remains cool, crop
production should not be adversely impacted. However, as we move into April,
temperatures will quickly start to increase, and any potential stress will build.
SovEcon recently increased their Russian production figures to 94mmt,
but the weather remains a flag to watch.
Canada saw some good moisture along the Alberta southern borders in the
past week. The rest of the Prairies missed out.
Snow and moisture levels remain patchy ahead of seeding.
From a technical standpoint, the net open interest positions ie the balance of sold and bought futures positions remains
overwhelmingly bearish. This means that the fund managers and speculators are
still betting on prices going down. This could be a bear trap if we see a
sudden escalation in the war or a major production problem emerge.
USDA overshadows trouble and strife
Next week
Short term I think the market continues a negative trend. Unless the USDA surprises with a sharper-than-expected reduction in corn area, I suspect the traders are pretty well positioned. Once the report data has been digested, maybe then the focus will resume on what is happening in the Black Sea. Beyond that, weather will drive markets.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Mecardo, USDA, Reuters, SovEcon
Categories
Have any questions or comments?
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