Another Banner Year for Russian Wheat Exporters?
Russia’s winter wheat potential has likely been damaged by excess rainfall in Stavropol and a cold snap in Central Russia. At the same time, Turkey has reportedly curbed imports of wheat from Russia. The USDA may have to revisit its forecast of Russian wheat exports of 29 million metric tons during 2017/18 in light of these events. Still, Russian winter wheat exports, supported by a high carryover, are expected to be near last season’s record. In light of Russia’s impact on Black Sea prices, we encourage traders to track weekly Black Sea milling wheat prices in Gro.
CROP YIELD FORECASTS
Initial US Corn Rating Faces a High Hurdle:
USDA will release its initial national good-to-excellent (G-to-E) rating of corn on Tuesday—which started at 72% last year. State reports last week showed a mixed bag, with rainfall boosting conditions in some areas and excess moisture and cold damaging crops elsewhere. Illinois and Iowa reported a G-to-E rating of 51% and 75%, respectively, vs. 69% and 73% last year. The University of Illinois’ Department of Agricultural and Consumer Economics has discovered a strong correlation between mid-season ratings and final corn yield. Similarly, Gro has found mid-season NDVI to be a strong predictor of US corn yields. We recommend monitoring both satellite and survey-derived data signals on a weekly basis within Gro.
China’s Soybean Crush Margins Turn Negative:
The National Oilseed Processing Association reported April soybean crush volumes that were well below expectations. April crush data from the USDA should follow suit. While lower crush volumes could be supportive for US soyoil prices, falling palm oil prices and negative Chinese soybean crush margins—a roughly $8-10 metric ton loss—are weighing on the entire soy complex. However, a decline in vegetable oil stocks in China and the US could ultimately change the price outlook. With US biodiesel imports slowing after a trade dispute, we suggest keeping a close eye particularly on US soybean crude oil stocks when the USDA releases its Fats & Oils report on Thursday.