Takeaway

The presenter argues for a market divergence between wheat and corn. Wheat lacks clear direction as Black Sea export uncertainty and war risk are offset by currently subdued global demand. In contrast, the corn market is reacting to a confirmed poor European crop, with the supply focus shifting to strong early-season Ukrainian exports and positive production forecasts from South America.

What the presenter said

• The wheat market is directionless, caught between geopolitical risk in the Black Sea and indications of subdued demand, such as an increase in world wheat stocks. [00:29, 03:09]
• Black Sea wheat exports remain dismal. Ukrainian wheat exports are around 2 million tons, half of the 4 million tons at the same point last year, while Russian September exports are also estimated to be significantly lower year-on-year. [02:44, 02:51]
• Demand is shifting away from the Black Sea. A recent large Algerian tender for 500,000 tons notably sourced from Romania, Bulgaria, and potentially the Baltics, avoiding Russian or Ukrainian origin. [03:27]
• The US corn yield was trimmed in the latest WASDE report to 178.5 bushels per acre, down from 180.7 the previous month. [04:33]
• The European corn crop is confirmed to be poor, with multiple agencies revising production estimates downwards. Consequently, EU imports are running at 4 million tons so far this season, compared to 2.9 million last year. [06:13, 07:22]
• South America is positioned to fill the supply gap. Ukrainian corn exports are currently double last year's pace, and production estimates for both Brazil and Argentina are starting the season strong, with no negative El Niño impact yet visible. [05:59, 07:47]

Trade ideas

• None stated. The presenter did not put forward an actionable trade idea, noting that technical indicators for wheat are neutral and the market is waiting for a clearer catalyst from the Black Sea situation. The view on corn is that a poor EU crop is being offset by strong prospects in Ukraine and South America.

Levels and data cited

• Chicago December wheat: Potential upside to 795; support at 672 (100-day moving average and lower Bollinger Band).
• Paris December wheat: Potential upside to 259; support at 225 (100-day moving average).
• USDA US Corn Yield: 178.5 bushels per acre.
• Ukrainian Wheat Exports: ~2 million tons (vs 4 million tons last year).
• Ukrainian Corn Exports: 1.788 million tons (vs 906k tons last year).
• EU Corn Imports: 4 million tons YTD (vs 2.9 million tons last year).
• Argentina Corn Production (Rosario Grain Exchange): Estimate raised to 67.5-70.5 million tons (from 66 million).

Risks and what would invalidate this

• The presenter identified ongoing conflict and diplomatic discussions surrounding the Black Sea as the primary source of uncertainty for the wheat market.
• The potential for El Niño to negatively impact the development of South American corn crops remains a risk.
• Early US corn harvest reports from some areas like Illinois suggest yields could be 10% lower than last year.