THE global grain trade has been sweating on a resolution to Don's Party (the US-China trade war) for many months now, and they are continually disappointed.
Many were expecting measurable progress to be made during Oval Office meetings late last week between President Trump and the respective trade delegations.
Instead, all they got was another rehashing of the same talking points and the same contradictory language. On the one hand, China says that progress is being made and on the other hand, the US says that there is still significant work ahead. It is difficult to determine who really knows what is going on in this drawn out game of cat and mouse.
US and Chinese negotiators meet again this week in a bid to resolve the long-running dispute that has cast a shadow over global financial markets and forced significant changes to traditional commodity trade flows since it began more than 21 months ago.
The Don (President Trump) closed the week saying he remains confident a positive outcome will be reached, but any market optimism was dashed when he said that agreement could be concluded within the next four weeks. This timeline was well outside most grain trade expectations and the futures markets corrected accordingly. Many were hopeful (or blindly optimistic) that an announcement would be made before the release of next week's World Agricultural Supply and Demand Estimates.
Despite the profit-taking in last Friday's session, the US grains and oilseed futures markets did an excellent job of recovering from the previous week's bearish USDA quarterly grain stocks report and the absence of a resolution to the trade stalemate.
The USDA will release the April WASDE report early Wednesday morning Aussie time. It will provide an update of US demand ideas, as well as global supply and demand balance sheet adjustments. It will also provide an insight into the implications of the recent quarterly grain stocks report on the 2018-19 supply and demand balance sheets. The first official balance sheet estimates for the 2019-20 season will not be released until the May WASDE report.
The Northern Hemisphere crop appears to be progressing well despite some parts of Europe being a tad drier than average over the past month to six weeks. May and June are the money months across Europe, so there is plenty of time to get the required rains before the crop moves into the moisture dependent reproductive phase. However, rain would definitely be welcomed in April to keep the winter crop on track for above-average production this harvest.
The Northern Hemisphere crop appears to be progressing well despite some parts of Europe being a tad drier than average over the past month to six weeks.
FranceAgriMer is a national organisation for agriculture and fisheries and operates under the authority of the French Ministry for Agriculture. It released its latest crop ratings late last week and estimates that 84 per cent of the French soft wheat crop is in good to excellent condition, down 1pc from a week earlier. It estimates that 80pc of the French winter barley crop is in good to excellent condition, down from 81pc last week.
Parts of Ukraine and southern Russia have been a little drier than normal in March, but they entered the month with a good profile, so the lack of precipitation is not enough to raise concerns at this point according to local crop scouts.
Temperatures have also been above average in March, particularly in Ukraine. This has led to the winter crops being two to three weeks ahead of normal. Historically, this is a positive factor for final yields, as long as moisture is not a limiting factor as the crop matures.
According to Russia's Agriculture Ministry, 91.5pc of their winter crops are in a good and satisfactory condition which is roughly in line with the same time last year. Their current wheat production forecast is in the 75 to 78 million tonnes range.
Weather conditions across Turkey's winter crop production areas have been quite favourable so far this season according to the US Ag Attaché who has forecast 2019-20 season wheat production at 19mt. This is unchanged year-on-year despite a 5pc decrease in the seeded area. Conversely, the area planted to barley has increased by 5pc compared to last year and production is expected to be around 14pc higher than last year at 8mt.
In North America, the USDA's first US winter wheat crop progress report rated the crop at 56pc good to excellent. This compares quite favourably to 32pc at the same time last year. This is the highest initial good to excellent rating in three years. Only 9pc of the crop is currently rated poor to very poor compared to 30pc at the same time last year.
Across the US, soil moisture is considerably higher this year than at the same time last year. Based on reports from 48 states, topsoil moisture nationally was rated at 92pc adequate to surplus compared to 76pc last year and 8pc very short to short compared to 24pc last year. Subsoil moisture was rated at 92pc adequate to surplus compared to 72pc last year and 8pc short to very short compared to 28pc last year.
Canadian farmers are reeling over reports that China has extended its restriction on buying canola from one company to all Canadian exporters, reportedly due to quality issues. The escalating rift is likely to see Canadian farmers slash canola planting this spring by up to 10pc, or 900,000ha, and boost spring wheat plantings by a similar area which equates to around a 9pc increase.
If the buying restrictions continue through to the end of the year, it will potentially provide an opportunity for Australian canola growers and exporters providing the anti-dumping investigation into Australian barley exports is resolved favourably and is not extended to other commodities.