The fact that IKAR (market analyst) increased Russian wheat to 82mmt (SovEcon 81, USDA 78), did not dampen the bulls enthusiasm.
As a student of agriculture, we are also a student of weather. This week we learned a new word – Derecho. The central US state of Iowa – one of key “I” states and #1 corn producer, was hit with the weather phenomenon – essentially a fast-moving, straight line of thunderstorms packing winds of up to 140mph (225kph). The results were 10 million acres of corn flattened, steel bins knocked over, elevator structures damaged, roof’s torn off and 500k without power. The damage is reminiscent of when a cyclone makes landfall.
The corn market has rallied over 20¢/bu in anticipation that the expectation of a record crop has just taken a U-turn. The ProFarmer tour has provided some timely updates, indicating that the national corn crop rating has fallen 1 point with notable (and unsurprising) deterioration in Iowa. (courtesy @kannbwx)
It will be interesting to see if the rally in the corn and wheat market can be sustained. We think it likely that the rally in corn has helped support wheat and perhaps amplified the moves we saw last Monday night. In the absence of fresh news however, it will not be surprising to see both markets eventually moving lower.
Weather worries weigh on expectations
The fact that IKAR (market analyst) increased Russian wheat to 82mmt (SovEcon 81, USDA 78), did not dampen the bulls enthusiasm.
As a student of agriculture, we are also a student of weather. This week we learned a new word – Derecho. The central US state of Iowa – one of key “I” states and #1 corn producer, was hit with the weather phenomenon – essentially a fast-moving, straight line of thunderstorms packing winds of up to 140mph (225kph). The results were 10 million acres of corn flattened, steel bins knocked over, elevator structures damaged, roof’s torn off and 500k without power. The damage is reminiscent of when a cyclone makes landfall.
The corn market has rallied over 20¢/bu in anticipation that the expectation of a record crop has just taken a U-turn. The ProFarmer tour has provided some timely updates, indicating that the national corn crop rating has fallen 1 point with notable (and unsurprising) deterioration in Iowa. (courtesy @kannbwx)
It will be interesting to see if the rally in the corn and wheat market can be sustained. We think it likely that the rally in corn has helped support wheat and perhaps amplified the moves we saw last Monday night. In the absence of fresh news however, it will not be surprising to see both markets eventually moving lower.
The week ahead….
The weight of Northern Hemisphere harvest and improving weather in Australia will keep the bears happy. Domestically, we are seeing basis deteriorate as growers start to sell, trying to make up for lost time.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: USDA, IKAR, Karen Braun, Reuters, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
January WASDE spooks the Bulls
This week the wheat market has ground lower as first, the anticipation of the Jan WASDE report saw market participants take to the sidelines, and
Big cut to Brazilian beans
A raft of report releases by the USDA have done little to stir up grain and oilseed markets. Changes to forecasts were largely in line
Canola back up but waiting for wheat
The massive winter crop harvest is close to finished, with a few very heavy delivery weeks in December and early January breaking the back of
New Year, old themes
The wheat market began the new year with more of a stagger than any kind of billion-dollar strut. We suspect the losses in market prices
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.