Market Report on 18.08.17

£/$1.2888  £/E1.0979  E/$ 1.1740

UK

Rapemeal is firmer in nearby positions but unchanged further forward. Soyameal seems to be unchanged.

Grains

Once again Chicago wheat closed lower yesterday, as funds sold another 7000 contracts on the day, despite weekly US export sales beating expectations at 634,000MT. This takes the season total to 11.16MMT, on par with last year. However the impact of not only the increasing Russian crop size but also the speed and extent of the decline in Russian export prices over the last few days seems to have spooked the market, despite the fact that Russia's export capacity is limited. European wheat futures were also lower yesterday, pressured by the discounted offers out of the Black Sea as well as ongoing poor weekly EU shipments, with the season total in the first seven weeks already down 2.2MMT on last year at 1.5MMT. In UK news, Defra released its provisional forecast for English 2017/18 cereal plantings yesterday. Spring barley plantings are estimated at a new record of 478,000Ha (+15% YoY), wheat acreage is seen down 3% at 1.64Mha while winter barley is seen down 4% at 361,000Ha. Chicago corn fell for the third straight session yesterday, hitting fresh 11-month lows, with weekly export sales disappointing at 734,000MT. Current new crop export commitments are running 45% below a year ago, versus the USDA's 17% projected decline and this comes as South American exports are ramping up. In Argentine news, the Buenos Aires Grains Exchange put the Argentine corn harvest at 85% complete, in line with last year but on a bigger planted area. The national yield is put at 8.12MT/Ha which remains above expectations but BAGE kept their crop estimate unchanged at 39MMT due to a possible decrease in harvested acres as a result of flooding (USDA is at 41MMT). French corn conditions are put at 79% good/excellent, unchanged on the week according to Agrimer.

PROTEINS

The Chicago soy complex ended higher yesterday, with soybeans managing to move away from Wednesday's 6-week lows. Markets were supported by good US export sales on soybeans (1.35MMT versus 350,000-850,000MT expected), strong Chinese demand (they bought 165,000MT of US soybeans) and a drier outlook for the US Midwest. The market now awaits next week's ProFarmer crop tour in the US to get more of an idea on crop conditions. Closer to home the European bean crop has suffered quite a lot during the past 4-6 weeks due to severe drought in the East of the continent. It is expected that main producing countries such as Italy, Serbia and Romania will see around a 25% drop in yields as a result of the hot, dry weather. In UK news, yesterday Defra projected farmers in England will plant 522,000Ha of rapeseed next season, down 4% on this season.

FX & ENERGY

Sterling held fairly steady yesterday against both the dollar and the euro. British retail sales growth slowed broadly as expected in July after a strong second quarter, as shoppers cut back on purchases of most goods other than food, adding to worries about a fall in consumer demand caused by higher inflation. Year-on-year retail sales growth dropped to 1.3 percent in volume terms, down from 2.8 percent in June, the Office for National Statistics said on Thursday, a shade lower than the 1.4 percent rise forecast by economists in a Reuters poll. Looking at the three months to July as a whole, which smoothes out monthly volatility in the data, annual sales growth was the weakest since November 2013 at 1.8 percent.

CBOT Wheat

CBOT Corn

CBOT Soybeans

CBOT Soymeal

CBOT Soyoil