Agricultural markets had a rough week as the market reacted to the volatility in the Chinese economy. China is a major importer on the global market, so any reduction in the Chinese economy raises concern on future demand.
CBOT March 16 futures finished the week slightly lower at 468.4Usc/bu down 0.8 USc/bu for the week.
Some of the US hit by storms late last month and concern was rising about the condition of the growing winter crop. The latest USDA crop condition rating suggesting that the unfavourable weather thus far had done little damage to the 2016 crop. With Good to Excellent ratings for selective states all over 50%.
Weather conditions across parts of Poland, Ukraine and Russia saw temperatures plummet low enough to cause possible winter kill. Nevertheless also bringing greater snow cover to protect the winter crops ahead of harsher weather in the coming weeks.
US Wheat continues to struggle to find export demand. With shipments of US wheat at the lowest levels since the marketing year began. For the week ending 31 December the US exported only 76,500t of wheat well below 200 – 400k analysts’ expected.
Furthermore Argentina’s 2016 wheat production has been forecast up to 10.1Mt, 0.6Mt higher than the previous estimate. The upward revision is due to higher than expected yields. Wheat exports from Argentina are expected to increase!
An increase of supply to an already ample market combined with the slowdown in the Chinese economy and a stronger US dollar points to further pressure on US exports.