Tightening corn and wheat stocks will be the rallying cry for market bulls for the foreseeable future and it is likely to be the catalyst for increased volatility. Of the 295mmt of wheat in storage globally, 50% is held in China and another 9% held in India. Collectively, the world’s top 8 exporters now hold approximately 80mmt between them. Similarly, the US will be running on fumes for corn stocks. It is estimated that US reserves have fallen 60% year on year and will be running at 9.2% stocks to use, implying only 33 days of use is available (source: Karen Braun @kannbwx).
These facts alone put huge emphasis on new crop supplies. Currently, Brazil’s safrinha (second) corn crop is looking for rain. The issue with this year’s safrinha crop was it was planted late. It is thought that 30% was planted after the typical cut-off date. This means that a fair percentage of the crop will be in the key reproductive stage as the weather turns drier and colder. Dry weather now could hurt the vegetative state that determines yield potential.
The northern US Plains are abnormally dry but could get some moisture this week. Canadian Prairies are a case of the ‘haves and haves not’. A winter blast intensified, dropping snow and rain totaling 20-35mm – but localised over Manitoba and SE Saskatchewan. The majority of Saskatchewan and Alberta (key growing areas) missed out.
Weather bringing ‘heat’ to the market
Tightening corn and wheat stocks will be the rallying cry for market bulls for the foreseeable future and it is likely to be the catalyst for increased volatility. Of the 295mmt of wheat in storage globally, 50% is held in China and another 9% held in India. Collectively, the world’s top 8 exporters now hold approximately 80mmt between them. Similarly, the US will be running on fumes for corn stocks. It is estimated that US reserves have fallen 60% year on year and will be running at 9.2% stocks to use, implying only 33 days of use is available (source: Karen Braun @kannbwx).
These facts alone put huge emphasis on new crop supplies. Currently, Brazil’s safrinha (second) corn crop is looking for rain. The issue with this year’s safrinha crop was it was planted late. It is thought that 30% was planted after the typical cut-off date. This means that a fair percentage of the crop will be in the key reproductive stage as the weather turns drier and colder. Dry weather now could hurt the vegetative state that determines yield potential.
The northern US Plains are abnormally dry but could get some moisture this week. Canadian Prairies are a case of the ‘haves and haves not’. A winter blast intensified, dropping snow and rain totaling 20-35mm – but localised over Manitoba and SE Saskatchewan. The majority of Saskatchewan and Alberta (key growing areas) missed out.
The week ahead….
The issue with tight stocks, is that every threat – perceived or real – will spook the market. Might want to buckle up. It could be a wild ride.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: USDA, Reuters
Categories
Have any questions or comments?
Click on graph to expand
The sharks are circling
It was a bloodbath in the agricultural commodities last night, indeed the whole week. Since last Friday, Dec ’22 wheat has lost 139¢/bu or $62/t
Percentiles – June 2022
Mecardo’s Percentiles update for June 2022. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important
Opportunity awaits the brave
Where is the opportunity in SWAPS? Any keen market watcher will have noticed the discrepancy between AUD Futures (SWAPS) and the cash price. The spread
Yield forecasts down but still exceptional
With the winter crop largely in the ground, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) have released their first estimates of
Don’t have an account with us? Join free.
You can have full premium access to all of our content with a monthly or annual subscription.
Alternatively, create a free account to access our Insights blog and two free premium article a month!
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.