David Sheppard, Gleadell’s Managing Director, comments on the wheat market.
Wheat
- USDA reports corn crop is now 86% planted against 99% last year and 90% as five-year average.
- Russia’s wheat outlook brightens – exportable surplus for 2012/14 estimated at 13-15mln t.
- Strategie Grains raises 2013 EU-28 total cereal production by 0.8mln t to 292.6mln t, 15mln t higher than 2012.
- UK raises 2012/13 imports to 2.54mln t, with commercial end-season stocks projected at 1.94mln t.
- USDA reports 31% of the US winter wheat crop in good/excellent condition – poor/very poor reported at 42%, up 1 point.
- USDA reports spring wheat 79% planted against 100% last year and 86% as fiveyear average.
- China’s CNGOIC reports up to 1.5mln t of US SRW traded for 2013/14 – priced 10% below domestic prices.
A return to wetter conditions in the US mid-west has stalled corn plantings, with only 15% planted last week. Although sowing will continue into early June, many analysts have started trimming overall area down by 2-3mln acres, which could reduce total output by 8-12mln t. Weather and its impact upon planting and crop development will be key over the next few weeks not only for US corn and US spring wheat, but also for the US winter wheat harvest now underway.
European prices, supported by the firmer US markets, have risen €2 on the week. Like the US, a wetter weather pattern has moved across much of northern Europe, deemed by some to be beneficial for crops. Moisture has also moved into parts of Southern Russia / Ukraine. Black Sea crop prospects are improving, albeit dependent on weather, and the likelihood of increased export volumes will pressure the European markets, especially with EU crops also looking good and plentiful.
UK markets remain a dull affair with little consumption buying interest and a general lack of farmer selling. Old crop UK wheat is competitive for export basis 72kg – but demand is not extensive. Domestic demand has increased for July, with merchant shorts looking to cover requirements for a season that could be extended by a week or more. That said, a spell of better weather is forecast for the first half of June across most of north-west Europe, which will be very welcome. The numbers released by DEFRA would point to adequate supplies of wheat, although this will remain regional, with premiums firming or falling depending on local demand.
New crop markets remain a stand-off affair. Farmers (across the EU and certainly in the UK) have 75-80% of the crop to sell and consumers, who are mostly bearish, have a lot to buy.
Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market
- The oilseeds complex continues to focus on US plantings and tight old crop US supplies. This week bean plantings were reported to be 44% complete compared with 87% last year and 61% on average. The market is very volatile at the moment and can react to any perceived delays in plantings. Wet weather in the
- US has caused some delays, but this has also helped to replenish soil moisture.
- USDA reports that China has cancelled 147,000t of soybean purchases.
- The old-crop rapeseed market remains competitive, with merchants shortcovering and the crush looking for seed. We feel farmers need to be cautious here, though, as French seed could potentially trade into the UK for early July.
- The new-crop rapeseed market remains very quiet both in the UK and Europe, with farmers reluctant to sell and the crush not looking to book seed.
