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Turner's Take Ag Markets | India Estimates 106 MMTs Wheat Production

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Markets
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

MACRO MARKETS | Now that the US is technically in a recession (two consecutive quarters of negative GDP growth), speculation is rising that China may be in recession too.  The market was caught off guard with an interest rate cut as economic conditions deteriorate in China.  If the US and China are both in recession it will be difficult for the global economy not to enter a recession too.  

Crude oil is now back in the mid 80s and the market is transitioning from backwardation to contango. Crude prices are still elevated but the effects of slow growth, US recession, inflation, and higher interest rates are taking a toll on energy demand.  One would think energy prices would be even lower with the prospects of US and China in recession but that is not the case. OPEC came out today and said the chief reason why energy prices are so high is due to a lack of investment in oil and gas.  OPEC is not the reason for the spike and they have been increasing available supply during the rally.  If $80 (or $70) is a low as crude can get during a US and Chinese recession, what happens to energy prices when these economies start growing again?

GRAINS |  For the first half of August, 21 ships with 560K tonnes of grain has passed through the Ukraine grain export corridor.  15 more ships have been able to come to the ports to load fresh supplies.  Today, four ships left Ukrainian ports carrying sunflower meal, sunflower oil, and corn under the UN grain export corridor.  Ukraine should be able to hit 3 to 4 MMTs of exports under the new export corridor agreement.

India released their 4th and final yield estimates for 2021-2022 planted/harvested crops.  India is projecting 106.84 MMT of wheat.  Private estimates have wheat in the 90s.  Overall grain production is estimated at a record 315.72 MMT.  While the hot/dry conditions in Punjab and Haryana hurt production, overall the nation had a very good year.  If true this will as a bearish surprise to many private forecasters that lowered Indian wheat and grain production aggressively earlier in the summer.  

Wheat and corn are finding some support today after a couple of down days.  For now rallies will most likely be sold as we head into N. American and European harvests for spring planted crops.

 

OILSEEDS | Weather forecasts for N. America are getting warmer and much of the US Midwest is wetter in the last half of August. This will improve soil moisture and crop conditions for soybeans. It will also extend the soybean growing season for a late planted crop.  Finally, the extended warm period in September decreases the odds of frost damage to the canola crop.  Lower energy prices and improved growing conditions point to pressure on oilseed markets for the next four weeks.

 Craig Turner
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craig.turner@stonex.com
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