Miller Magazine Issue: 116 August 2019

96 MARKET ANALYSIS MILLER / AUGUST 2019 58% at the silking stage compared with 90% last year and 83% on average. While everyone is waiting for the end of the corn polli- nation period in the USA, Europe and the Black Sea re- gion, the quality of wheat has become the main problem. The wheat market is now unbalanced by lower produc- tion forecasts in Russia and a shortage of fodder grain, while buyers are not willing to pay a high premium for the protein that Russian producers are waiting for. Harvesting campaign of early grain in the Northern Hemisphere is in full swing. French wheat is sta- ble. French wheat condition stable at 73% v 71% in ‘18 Harvest now at 63% v 88% LY. According to the Russian AgMinistry, the coun- try’s 2019 grain har- vest is well ahead of the 2018 pace with already 51.3MMT of grains harvest- ed from 14.9Mha compared with 39.4MMT from 11Mha last year. Ukrainian agrar- ians already har- vested 29,7 mln tonnes of early grains and pulses throughout the areas of 8 mln ha, or 80% of the forecast and already supplied 2.614 mln tonnes of grains and pulses on foreign markets. Already you can analyze the first Soft Wheat Ex- porters in EU July 1-28, 2019. Big production year on the cards but July exports are lagging at 761,586 mt vs 1.7 mmt (5-year average) and Russia isn’t even compet- ing. The EU is expecting 25.5 mmt of exports. Prices are bound to come off soon. Nowadays is tendering time. Not only Egypt’s GASC arranges tenders. Jordan’s state grains buyer purchased 60,000 tonnes of hard milling wheat to be sourced from optional origins in a tender for up to 120,000 tonnes, which closed on Tuesday, traders said. The wheat was bought at $229.50 a tonne c&f for shipment in the sec- ond half of October. The seller was said to be trading house Nibulon (Ukraine). One other trading company, Ameropa, took part in the tender, offering $234.12 a tonne c&f. So main for now is wheat S&D. Globally wheat is over- produced but the weather could make the biggest im- pression even for the last harvesting weeks. Talking on corn, the leader for today is information about crop condition at corn belt (we still remember also about unknown areas in the US). If we would try to find the answer does crop condition correlate with final yields – no. Numbers which provides Karen Broun from Reuters on her Twitter show that for example Illinois con- ditions, corn, good/excellent: 7/31/16 - 83%, 7/30/17 - 63%; Illinois yield, final, bushels per acre: 2016 – 197, 2017 - 201. But also: 7/27/14- 82% g/e, 7/26/15 - 57% g/e; 2014- 200 bpa, 2015 - 175 bpa. Rains cut the area for sure. Now we are worrying about hot weather as per pollination. French corn condition hits 67%v 75% a week ago, 71% in ‘18; Silking at 63% v 89% LY. Meanwhile, in Southern Hemisphere, a unit of Brazil’s JBS SA plans to invest $47.5 million to build a biodiesel plant entering service by 2021, as the company looks to cash in on Brazil’s accelerating clean fuel drive. Soybean is the main raw material for biodiesel production in Brazil. Trump’s tweets about China and expectations of re- duced Chinese soy imports in 2019/20 due to the African Swine Fever pushed Nov-19 CBOT soybeans below the $9/bu mark once again. Soymeal prices were also under pressure with the Aug-19 CBOT soymeal contract clos- ing at a 2-month low below the $300/sT psychological level after China was reported to visit Argentine soymeal crushing plants soon. US soybean ‘Good to Excellent’ ratings were unchanged on last week at 54% compared with 70% last year whilst 57% of the crop was blooming vs 85% last year and 79% on average. Despite the sharp decline in the 2019 EU production, rapeseed continued lower for a 4th consecutive session - its longest losing streak in a month - amid harvest pres- sure, the arrival of Ukrainian and a weakening soy/veg oil complex. As we had predicted earlier, the focus on expensive corn was temporarily shifted to wheat. So far, because of the pressure of the proceeds from the fields, prices have weakened, but a recession is possible due to the risk of reducing the harvest and issues with a sufficient supply of feed grains. After that, corn will return to the arena with news about the real situation in the US and loss figures in Europe and Ukraine.