UK wheat planting area down 25%
Jonathan Lane, Gleadell's trading manager, comments on grain markets:
Wheat
• USDA raises US/global wheat stocks. US corn stocks left unchanged; world stocks trimmed.
• USDA winter wheat crop ratings continue to improve as storms bring moisture to US plains.
• India’s March 1st grain stocks reported at 27.1mln t (government target is 8.2mln t), with 90mln t+ 2013 wheat crop looming.
• Ukraine’s 2013/14 grain output seen at 55mln t, compared with 46mln t in 2012/13.
• English/Welsh 2013 wheat area planted as of Dec 1st reported as being 25% lower at 1.39mln hectares.
• Russia’s role of cheap wheat supplier may be in jeopardy in 2013 – low stocks/government buying.
• Strategie Grains trims its estimate of the EU-27 soft wheat crop by 0.7mln t to 130.5mln t.
Despite the apparent ‘unchanged’ USDA reports, US prices for corn and wheat have risen about $9 on the week.
US corn stocks were left unchanged, when analysts were looking for inventories to increase. Higher feed usage surprised the market, where the expectation was for lower corn/higher wheat use in feed. In addition, although US wheat stocks were increased, stocks of soft red winter wheat (used in feed) were reduced, leading many to believe that wheat feeding in the US is higher than being projected.
The EU market is unchanged on the week, albeit after being lower, gaining support from the firmer US markets. Stocks are projected at a low level after an aggressive export campaign, with USDA forecasting ending stocks at below 10mln t. Strategie Grains have again trimmed their 2013 EU-27 soft wheat crop estimate by another 700,000t, due to lower acreage in the UK, France, Italy and Poland.
The main story in the UK was the release of the December 1st planting figures, showing the wheat area planted in England/Wales was 25% down on the year. Although we expect, weather permitting, a slight increase in plantings post December 1st, this very low estimate would point to a final UK wheat area of approx 1.55mln hectares. Even using a five-year average yield projection, this would produce a UK wheat crop 1.6mln t lower than in 2012, with quality again in question.
Oilseed Rape
The MATIF rapeseed May13 contract has lost around €11 this week due to a lack of crush demand and buying interest in Europe. Premiums in the physical market for old and new crop both in Europe and the UK have also come under pressure due to current lack of demand. Domestic old crop spot prices are currently trading around £382/t ex farm.
Sterling has also rallied against the Euro this week with the currency markets remaining extremely volatile.
In the soybean market the Brazilian harvest continues and is now around 50% complete. The market has moved lower this week on technical trading and some rumours of falling Chinese demand. The fundamental picture remains unchanged for beans with US old crop supplies tight but the South American harvest is underway, moving beans to market.
