CA2320EN.pdf

Usd per 60 2018 2017 2016 2015 2014 wheat maize

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USD per tonne 0 20 40 60 2018 2017 2016 2015 2014 Wheat Maize Soybeans percent decline between May and September, as favourable weather in the US boosted yields. Despite record supplies at the start of the 2018/19 maize crop year (September 1), values remained mostly elevated compared with the same period for the past two years. Conversely, soybeans registered the worst price performance among the three commodities. After slumping to a ten-year low at the end of June in response to China’s proposed trade tariffs, prices remained distressed as US weekly crop progress reports signalled record yields and production. Despite US origin soybean values declining as much as 30 percent below other origins, fully pricing-in the Chinese tariff, only Futures markets Contributed by Ann Berg (International Consultant) 0 200 400 600 2018 2017 2016 2015 2014 Wheat Maize Soybeans thousand contracts 0 15 30 45 2018 2017 2016 2015 2014 Wheat Maize Soybeans percent
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Market indicators 90 FOOD OUTLOOK NOVEMBER 2018 210 000 tonnes (three US soybean cargoes) were shipped to China between September 1 and November 1, compared with about 5 million tonnes for the same period last year. Record US domestic crush levels reported to be 17 percent higher year-on-year (y/y), were deemed unlikely to make up for lost exports to China, which exceeded 36 million tonnes in 2016/17. The influence of exogenous markets, such as foreign exchange movements and energy prices, remained subordinate to trade tariffs and supply and demand fundamentals. Higher trending prices of West Texas Intermediate crude oil y/y and the US Administration’s promise to expand the percentage of ethanol from 10 to 15 percent in domestic gasoline blends may, however, have kept maize prices from falling below levels of the past two years. The US dollar, despite some analysts’ predictions of continued upward movement, traded in a sideways pattern against the major currencies over the past five months, producing negligible effects on grain and oilseed prices. FORWARD CURVES Forward curves for wheat, maize and soybeans displayed upward sloping (contango) price configurations extending until May 2020, reflecting surplus supply situations and low interior basis levels for all three commodities. The y/y curves (calculating the difference between December 2018 and December 2019 contracts) for wheat and maize at USD 24 and USD 12 respectively, were slightly less upward sloping by a few USD per tonne than the past two years, and possibly predictive of a more optimistic demand picture for the current crop year. The soybean curve between November 2018 and November 2019, however, reached an historic wide contango level of over USD 25 per tonne, reflecting the dire effects of the Chinese trade tariffs on export demand. That same curve was quoted at USD 8 and USD 2 contango for the same time period during 2017 and 2016 respectively, when China’s demand for US soybeans seemed unstoppable.
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