WEEKLY WHEAT REPORT 11 SEPTEMBER 2018

Transcription

1 18/01/02 18/01/16 18/01/30 18/02/13 18/02/27 18/03/13 18/03/27 18/04/10 18/04/24 18/05/08 18/05/22 18/06/05 18/06/19 18/07/03 18/07/17 18/07/31 18/08/14 18/08/28 18/09/11 WEEKLY WHEAT REPORT 11 SEPTEMBER 2018 Unigrain (Pty) Ltd Tel. No. : Fax. No. : INTERNATIONAL MARKET Table 1: CME and KCBT wheat prices and weekly change (cents/bushel) Currently 04/09/2018 Weekly change Monthly change (c/bu) (c/bu) CME Dec ¾ 531 ½ -6 ¾ -44 ¾ KCBT Dec ¾ ¼ -56 ¼ US wheat prices traded lower in the past week with both CME and KCBT wheat for December trading lower in the past week. On a monthly basis US wheat prices are still sharply lower with December CME and KCBT wheat giving up 7.8% and 9.6% in the past month respectively. On the technical chart for December KCBT wheat we see that the market has been under pressure for most of the past week with KCBT wheat prices finding some support around $5.10/bushel and prices pushed slightly higher in the session yesterday. Support is seen at $5.10 and the $5.00-$4.90 area while resistance is seen at the moving averages with the 40-day and 100-day seen around $5.56/bushel. The supportive factors for US and world wheat are the production losses seen in some of the major world exporters. Crop losses in Russia, Ukraine and Australia could see some of the demand return to the US. To date the Russian government indicated that they do not plan to limit wheat exports. However the US wheat export demand has been slow and this is limiting some of the buying interest in US wheat futures. The market is also starting to look at the weather conditions in the US winter wheat areas with planting underway. US wheat market US wheat prices has posted some gains in the past week with the dollar relatively flat. The dollar dipped below in the past week and traded as low as to the euro but the dollar is weaker once again and is seen around to the euro once again Figure 1: December KCBT wheat and dollar/euro KCBT Dec Dollar/Euro US wheat export progress The graph below presents the US wheat export progress seen this time of the year in the past few seasons. In 2018/19 the US wheat committed for exports represents 34% of the USDA export estimate which is well below the 5-year average seen at 51% for this time of the year. The slow export progress out of the US continues to be a limiting factor for US wheat futures and could result in a downward adjustment in the USDA export estimate going

2 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 forward. However the crop losses seen in some of the major world wheat exporters very well increase the demand for US wheat going forward Figure 2: US wheat export commitments to date and % of total (000 tons) 13/14 14/15 15/16 16/17 17/18 18/ Exports to date (1000 tons) % of total (RHS) USDA report The USDA will release their September supply and demand estimates in their report on Wednesday. The average market expectation of the 2018/19 US wheat ending stocks is seen at 941 million bushels which is slightly higher than the August USDA estimate seen at 935 million bushels Figure 3: US wheat ending stocks (mil bushels) Australian wheat The forecaster ABARE released their Australian wheat crop estimates yesterday. They pegged the 2018/19 Australian wheat crop at 19.1 million tons which is down from their previous estimate seen at 21.9 million tons (-13%) The massive drop in the Australian wheat crop is due to the drought conditions seen in the east coast producing areas. Keep in mind that the USDA in their August report estimated the Australian wheat crop at 22 million tons. Therefore we could see a downward revision in their estimate later this week as well. From the graph below we see that the current forecast for the 2018/19 season should be the lowest Australian crop in the past 10-years. Keep in mind that Australia is the 4 th largest exporter of wheat globally and usually exports 2/3 of their wheat crop. 2

3 18/05/02 18/05/09 18/05/16 18/05/23 18/05/30 18/06/06 18/06/13 18/06/20 18/06/27 18/07/04 18/07/11 18/07/18 18/07/25 18/08/01 18/08/08 18/08/15 18/08/22 18/08/29 18/09/ / / / / / / / / / / / / / / / / / / Figure 4: Australian wheat production (000 tons) European wheat prices European milling wheat initially traded lower in the past week trading as low as /ton but milling wheat prices for December has started to post some gains once again breaking above 200 and is seen at 202/ton this morning. Crop losses in some of the major exporters is support prices globally Figure 5: European milling wheat (Euro/ton) Local wheat market South African wheat prices traded lower in the past week with Safex December and March ending 0.31% and 0.32% lower in the past week. South African wheat prices were pressured by the stronger rand and the lower US wheat prices seen in the past week. With regard to the South African import tariff the current official import tariff is R640 but a new tariff of R298/ton has already triggered and the market awaits publication in the government gazette. A new higher tariff has also triggered for 2 of the 3-week needed. 3

4 18/02/23 18/03/09 18/03/23 18/04/06 18/04/20 18/05/04 18/05/18 18/06/01 18/06/15 18/06/29 18/07/13 18/07/27 18/08/10 18/08/24 18/09/ Figure 6: Safex wheat, rand and US wheat prices CME Dec KCBT Dec Rand/$ Safex Dec Safex Mar The rand managed to gain back some ground in the past week with the rand trading around R15.10/$ currently which is 1.3% stronger week/week. The rand is following the movements in the dollar while the massive emerging market liquidation seen earlier has eased at least for now. Key support for the rand is seen at R15.00/$ Figure 7: Safex Dec wheat and Rand/$ Safex Dec wheat Rand/$ The weekly South African wheat imports for the week ending the 31 st of August indicated that tons of wheat was imported in the past week. The wheat that was imported in the past week originated from Russia once again. This brings the cumulative wheat imports for the season to date at million tons. 4

5 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Figure 8: South African monthly wheat imports (Tons) The table below presents the share of the South African wheat imports from the various origins in the current season as well as in the past few seasons. From the graph below we see that 38% of the South African wheat imports in the season to date originated from Russia with the 2 nd most favored origin being Germany (14% of total). Table 2: South African wheat imports from various countries (%) 13/14 14/15 15/16 16/17 17/18 US Australian Argentine German Ukraine Canadian Brazilian Poland Lithuania Uruguay Russia Romanian Finland Latvia Czech Rep Total (%) FOCUS FOR THE WEEK US wheat prices traded lower in the past week. The factors driving the world wheat market is the crop losses in some of the major exporting countries while the slow export progress out of the US is limiting some of the strength. Key data for the world wheat market will be the USDA supply and demand estimates due to be released on Wednesday. On the technical chart for KCBT wheat we see support at $5.10 and the $5.00-$4.90 area while resistance is seen at the 40-day and 100-day averages seen around $5.56- $5.58. South African wheat prices traded slightly lower in the past week with the stronger rand seen in the past few sessions adding some pressure. The rand is trading around R15.10/$ currently. On the technical chart for December KCBT wheat we see support at R4500 with the 9- day average also around that level. Resistance is seen at R4580 and R4635 (the contract highs). 5

6 See the technical graphs below: Safex Dec-18 wheat prices KCBT Dec-18 wheat prices 6

7 Daily WEAZ8 Cndl, WEAZ8, Trade Price 2018/09/11, , , , , +9.00, (+0.20%) SMA, WEAZ8, Trade Price(Last), /09/11, SMA, WEAZ8, Trade Price(Last), /09/11, SMA, WEAZ8, Trade Price(Last), /09/11, /03/ /09/20 (JHB) Price ZAR T Auto RSI, WEAZ8, Trade Price(Last), 14, Wilder Smoothing 2018/09/11, Value ZAR T 30 Auto MACD, WEAZ8, Trade Price(Last), 12, 26, 9, Exponential 2018/09/11, 69.18, Value ZAR T March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 Auto 7

8 Daily KWZ8 Cndl, KWZ8, Trade Price, 2018/09/11, / 2, / 4, / 4, / 4, -3, (-0.57%), SMA, KWZ8, Trade Price(Last), 9, 2018/09/11, / 8+, SMA, KWZ8, Trade Price(Last), 40, 2018/09/11, / 8+, SMA, KWZ8, Trade Price(Last), 100, 2018/09/11, / /12/ /09/25 (CHG) Price USc Bsh / / / / MACD, KWZ8, Trade Price(Last), 12, 26, 9, Exponential, 2018/09/11, / 8+, -7 3 / 8+ RSI, KWZ8, Trade Price(Last), 14, Exponential, 2018/09/11, December 2017 January 2018 February 2018 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September /8 Value USc -7Bsh 3 / / 8+ 1/8 Value USc Bsh Auto 8