David Sheppard, Gleadell’s Managing Director, comments on the wheat market
WHEAT
- US authorities make no comment on a leaked proposal to cut the volume of ethanol in petrol blends, reducing the biofuel mandates for 2014 and 2015.
- Strategie Grains trims EU-28 soft wheat production by 300,000t to 135.2mln t, still 8% higher than 2012 production.
- US wheat continues to firm on crop concerns/delayed plantings/strong export demand.
- Russia’s Deputy PM puts 2013 grain harvest at 85-90mln t – PM and Ag ministry still at 90mln t.
- Buenos Aires Grain Exchange estimates Argentine 2013 wheat crop at 10.35mln t, up from 8.8mln t in 2012 but below current USDA estimates of 12mln t.
- Initial DEFRA UK harvest estimate of 12.1mln t undercuts trade forecasts.
Markets, although feeling firmer, are mixed over the past week. US markets are slightly weaker as the ongoing corn harvest weighs on prices, while European levels are slightly firmer (MATIF up €1.25/t and LIFFE up £1.50/t). Support continues from the strong pace of exports and concerns over Black Sea winter sowings.
EU markets also remain supported by the likelihood that the Black Sea region may disappear from the wheat export market, either to concentrate on exporting bumper corn crops or replenishing stocks, especially given the area’s new-crop planting problems. EU exports are running 3.5mln t ahead of last season, although the main export push has not been from France, but more from German and Eastern EU states.
DEFRA this week released its initial 2013 wheat crop estimate which, at 12.1mln t, was generally lower than trade estimates. Official data reported August imports at 255,000t, bringing the season-to-date total to almost 584,000t. Although up on last season (358,000t) this confirms the slowdown of imports, as UK millers return to UK supplies following record purchases of imported grain last season and through the 2013 harvest following last year’s poor quality harvest.
In summary, markets have consolidated over the past week, and in the short term they should remain supported. With the US finally agreeing (for a few months at least) to extend the debt ceiling, the US Government departments should get up and running, allowing the release of key weekly and monthly agricultural data. When and in what form this appears is still to be confirmed, but any data is better than none!
Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market
- Over the past week the soybean market has traded in a small range. The market has been hesitant due to US government problems and the resulting lack of USDA reports. Yield reports from the US harvest continue to be better than expected, but the market awaits confirmation from the USDA. In South America plantings are underway without any major problems. The current corn versus soybean spread encourages the planting of more soybeans at the expense of corn.
- MATIF rapeseed has ticked higher throughout the week on little news but the UK domestic market has firmed on crusher buying, strong UK meal demand and a firmer euro. An ex-farm price of £300/t has been achievable across the UK in spot positions and we have seen some decent volumes of farmer selling. The UK export market remains fairly quiet, with the delivered market currently a better sell.
- In summary we feel these are good levels for farmers to be putting some sales on the books as the market is near the top of the recent range. Volatility remains a factor and although we could potentially see further upside we also have the very real possibility of the USDA increasing this year’s US production figure, followed by a large South American crop early next year.
