GRAIN MARKETS - Jonathan Lane, Trading Manager
WHEAT
Spanish farmers are seen sowing 0.9% more land to winter grains – suffering from driest winter on record.
The Ukrainian government foresees no grain export limits in 2012/13 – with enough grain to meet domestic needs.
ProAgro raises its forecast for Ukraine’s 2012 grain crop to 45.66mln/t, including 21.3mln/t of corn/14.3mln/t of wheat.
The Ukrainian AgMin projects 2011/12 ending stocks of wheat at a record 7mln/t.
Russia exports a record 21.5mln/t of grain as of March 1 (17.2mln t of wheat) – leaving approx 6-7mln/t to export.
English/Welsh winter plantings rise 4.6% to 2.98mln hectares, with Scottish wheat area seen down 14%.
Morocco’s cereal harvest may fall by half to around 4mln/t, down from 8.4mln/t produced last season.
UK wheat exports slowed in January to 219tmt, bringing the season-to-date total to 1.8mln/t – leaving approx 700tmt surplus.
French agency AgriMer trims 2011/12 French ending stocks to 2.4mln/t – non EU wheat exports projected at 8.8mln/t.
Strategie Grain trims 1.6mln/t off its estimate for 2012/13 EU-27 soft wheat production (131.1mln/t) due to cold snap/Spanish drought.
The IGC sees global corn deficit in 2012/13 – production estimated at 880mln/t and demand projected to rise 13mln/t to 884mln/t. USDA report released last Friday provided few surprises and actually pegged US corn/soy stocks above expectations. However, this was short lived as buying interest was generated by continued crop concerns in South America and reports of additional corn purchase by China.
There are conflicting reports of the size of this year’s Chinese corn production and the levels of import needed. Local analysts continue to work with corn numbers lower than the USDA for Argentina and Brazil, leading analysts to believe US stocks will continue to tighten this year.
Wheat continues to be a follower of corn markets, although current weather conditions and tight French/UK supplies have supported markets. Record wheat stocks and the potential of another 675-680mln/t global crop don’t bode well for prices, however, crops are not yet made and there will be many weather scares between now and harvest. Tight US corn supply and demand will place greater emphasis upon the 2012/13 crop with the next key report, planting, due out on 30th March. Short term corn/wheat values look supported but a bearish report may change market sentiment.
OILSEED MARKETS - Willie Wright, Oilseed Trader
Soybeans didn’t get the comfort they were looking for from the USDA report last week. Although we did see crop production losses, there was a lowering of demand, keeping the end figures balanced. Post USDA soybeans have held around $13.40 basis March and look likely to trend higher for time being with some analysts predicting a return to $14.50 level. Oilseeds in general look over bought short term that is stopping some buyers coming to market with enthusiasm.
Crude oil continues to hold on to its recent highs and will be further bolstered by the progress with the Greek debt crisis.
Canadian canola has been rising in line with soybeans and rapeseed with a number of importers potentially looking to the Canadians for supplies throughout the 2012/13 campaign.
Rapeseed shows no signs of giving up its recent gains and could test its old high of €378, it will be interesting to see if we can push through this level and hold these prices. As we progress into the second half of the season, we see smaller volumes coming off farms with farmers unsure how much rapeseed they have left to trade. Because of the negative carry in rapeseed most merchants will have used their store stock by now, which could make the next two months quite interesting. New crop rapeseed has rallied €75 since early December, allowing farmers to lock in some good price levels. New crop looks well supported currently and farm selling may become more cautious if the drought warnings continue.
The weather will be a greater feature of the market in the coming months with abnormally dry conditions in many parts of Europe, rapeseed is advancing well and yield potential is the big unknown.
Crush margins remain very depressed with no real signs of improvement in the short term.
