Markets were far more subdued in the final trading session of the week
By ODA UK | Published at
Global markets were far more subdued in the final trading session of the week than they have recently been. Perhaps traders are taking a breather after all the volatility of the week just gone. Perhaps they are not willing to take any substantial position ahead of the weekend, or, indeed the USDA’s monthly report due next week. What we do know is that weather conditions in the US Midwest this last week were such that farmers did have a narrow window with which to plant corn. How much, though? Monday’s Plantings report will have added significance going into next week’s trading and price action. Don’t expect the USDA to slash and burn US corn area plantings just yet. They are a conservative bunch.
On another note, perhaps think yourselves lucky if you have cabbage stem flea beetle, aphids, lemon / orange blossom midge, pea and bean weevil or thrips and weevils, or all of the above. The Chinese are facing a far more impressive and substantial crop pest. The armyworm, a caterpillar-sized bug that devours corn plants, has recently spread through 18 Chinese states and is moving north into the heart of their corn production region. According to China’s Ministry of Ag. the bug “threatens the grain production security of China”. Emergency spraying measures are being deployed. China has corn stocks of 210Mt, so this isn’t going to change the overall global balance sheet anytime soon. That said, until recently, China didn’t have a problem with African Swine Fever. Until it very much did! This swine epidemic is responsible for the culling of around 1.2 million pigs, roughly 22% of China’s production and is largely responsible for sharply rising pork prices on the Continent and in the US and consequential its impact on demand for cereals and protein.