WHEAT

 
US Wheat markets pushed lower again prior to the Christmas holiday, as the market struggles with strong export competition and ample global supplies.

 
CBOT March 16 futures fell 14.6Usc/bu and finished the week at 469.4Usc/bu.

 
The winter wheat crop in the U.S. went into dormancy in decent enough shape. Some of the key states will update conditions over the winter, but the next benchmark for the market is Jan. 12, when USDA releases grain stocks and seedings reports.

 
Winter wheat in the Black Sea region appears to be improving after a rough start, though wheat production could still be down in Ukraine and perhaps Russia, but this is not seen as a major concern to buyers, considering the heavy global stocks.

Argentina returns as a competitive player in the world market, after the new government lifted currency and export controls. The recent changes has seen the Argentinian Peso weaken by nearly 27%.

 
Last week saw Argentina win the Egyptian wheat tender, with price being the clear deciding factor of the trade. Egypt purchased 120,000t of wheat at approx. $175/t, with the best French offer at $187/t and Russia at $193/t. Making Argentina 10% protein wheat the cheapest in the world!!

 
Russian lobbyists are calling for the Russian wheat export tax to be reduced. Russia is now the only mainstream exporter with export taxes in place. The markets have so far reacted bearishly to this news, as a lower tax could spur on the Russian export pace, in turn adding pressure to global wheat prices. Even if it does not increase export pace, Russian wheat may become more price-competitive with a lower tax.

Weekly Report 15_12_26