Uncertainty over currency, in particular, is keeping wheat market players sitting on their hands. While the weak market is supported amid a bullish tone in international trade, the actual level of activity started the year at a low level and has stayed there.
“The market is gently supportive, but with very little activity,” Rob Munro, managing director of Fengrain, told Agritrade News. “Imports seem to continue, with the UK balance sheet skewed with imports of maize and wheat.” Exports, in contrast were “pretty negligible.”
“Only historical business is being executed,” Mr Munro noted. “It is almost impossible to predict market direction, particularly where sterling’s going.”
AHDB Cereals and Oilseeds reported that concerns over the quality of Argentina’s wheat, and with US prices lower than those for its Russian competition, were boosting US export hopes and putting a bullish tone into the world wheat market.
A report by US Wheat Associates also pointed to this week’s talks between US and Chinese trade officials as a bullish factor. The discussions started in Beijing on Monday and ended on Wednesday, after being extended by a day. The markets took the prolonged meeting as a sign that some progress is being made towards ending the trade spat between the two countries. The negotiations follow a December meeting in Buenos Aires between US president Trump and Chinese president Xi in the margins of the G20 Summit held there. US Wheat Associates also noted that a weaker dollar had helped wheat gain in terms of the US currency.
The AHDB highlighted the effects of weather in Brazil and Argentina on potential crops of wheat and maize. “Wet weather in Argentina is increasing concerns around quality and yield losses in the wheat and maize crops. Conversely a continuation to the dryness in Brazil is threatening the development of maize crops,” it said on Monday. “The current weather patterns in South America are forecast to continue for the next two weeks.”
One problem for traders is that the US government shutdown, which started on December 22nd as president Trump argued with Congress over funding for his planned wall on the border with Mexico, means that the usual US government statistical information is not being published. The USDA said in a statement on its website on January 4th that “due to a lapse in federal funding, work on National Agricultural Statistics Service (NASS) and Office of the Chief Economist – World Agricultural Outlook Board (OCE-WAOB) reports have been suspended since December 22 2018 and remain suspended.”
“Given the lead time required for the analysis and compilation of Crop Production, Crop Production-Annual, World Agricultural Supply and Demand Estimates (WASDE), Grain Stocks, Rice Stocks, Winter Wheat and Canola Seedings, and Cotton Ginnings reports, those reports will not be released on January 11, 2019 as originally scheduled even if funding is restored before that date,” it continued. The dates of new reports would be decided once funding had been restored.