Tim Hannagan: The last bullish report
Thursday brought us a update on the demand side of grains with our weekly export sales report. It tells us how much of each grain was sold last week and becomes a gauge of near term demand.
When harvest is in, demand and outside market movement in crude oil, dollar index, metals and stocks become 90% of the driving force for grains. So demand side fundamentals are very important.
Wheat sales came in at 808 t.m.t. up 28% from the week prior and 7% over our four-week average. It was key to see Egypt in again as they are the largest world buyer of wheat monthly and turned away from the US last year and solely bought from Russian. Russia's drought put an end indefinitely to their exports leaving the US as Egypt's primary port to turn to. Brazil the world's second-largest wheat buyer was in as well.
Drought conditions in Brazil currently have them looking for wheat insurance as their crop as well as soybean planting remains in question.
The weekly wheat number is good but with 20 year high US inventory of wheat, leaves the demand side as a sign of a quicker reduction in ending stocks, but not a bullish pricing number.
Corn exports were 607t.m.t down 34% from the week prior as importers out of Asia back away ahead of this week's big crop report. Traditionally, buying slows the week prior these USDA reports as countries wait to see if numbers come in suggesting they should slow their buying pace or pick it up. In the big picture expect corn exports to stay strong into years end.
Soybean sales were 947 t.m.t off 46% from the week prior as importers awaited this weeks crop report but key world buyer China remained active in for 624 of the total as they meet needs for protein and extend coverage as dryness continues during bean planting season in number two world producer exporter Brazil.
What a week.