David Sheppard, Gleadell’s Managing Director, comments on the wheat market.
Wheat
- USDA reports corn crop is now 95% planted against 100% last year and 98% as five-year average.
- USDA trims corn yields to 156.5 bushels/acre – ending stocks reported higher than trade expectations.
- Ukrainian 2013 grain harvest could rise to 53-54mln t, from 46.2mln t in 2012 – exports put at 25-27mln t.
- Egypt’s GASC reports wheat stocks sufficient until December, having already purchased 3.5mln t of domestic supplies
- USDA reports 31% of the US winter wheat crop in good/excellent condition – poor/very poor reported at 42%, down 1 point.
- USDA reports spring wheat 87% planted against 100% last year and 96% as five-year average.
- Russian Ag. Ministry trims 2013 grains and wheat harvest – grain crop is now at 93mln t with wheat at 50-54mln t
Although US farmers continue to struggle to plant the last few million acres of corn and spring wheat, USDA’s latest update left projected acreage numbers unchanged. The reduction in yield is seen as a potential legacy of the ‘late planted’ crop. When delving into the history archives, the lateness of the planting and reduction in yields follows the pattern seen during 2009, when the US ended up with a record yield!
Despite the cut in the corn yield this week, ending stocks were higher than trade estimates, which drove corn prices lower and, with US wheat yields increased, the bearish sentiment spilled over into the wheat markets.
EU prices followed the US market lower, touching 12-month lows during the week and breaking the pivotal €200 level. French farm office AgriMer reduced its forecast of soft wheat stocks at the end of this season to 2.3mln t, from 2.5mln t, citing increased intra-EU exports as the main reason for the reduction.
Russia has started its 2013 grain harvest, with southern regions reporting yields considerably higher than last season. With harvest set to progress in many southern EU/Black Sea states increased export inventories will soon enter the supply chain, potentially eroding any existing price premiums.
As this season nears completion, the UK remains the only ‘black spot’ in an improving EU outlook. Weather has generally been favourable over the past weeks and although we have witnessed some improvement in the UK crop, it is improving from a very poor base. The 2013 wheat crop will be lower in quantity, but due to the lateness of planting and slow growing conditions, may well end up higher in quality terms, a scenario that would be welcomed by all in the grain chain if the weather is kind from now on.
Farmer selling for 2013/14 is behind the norm for this time of the year, but with the global picture remaining bearish, further downside in price is the likely outcome.
Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market.
- The domestic rapeseed physical market remains fairly quiet with small parcels of old crop trading into delivered homes. The new crop market is very quiet; farmers remain reluctant to sell, with lower prices and crop concerns being the reasons cited. The European physical market remains equally quiet but we expect to see an increase in farmer selling in the next few weeks.
- The MATIF rapeseed contract continues to come under pressure with a lack of bullish news in the market, new crop crush margins remain poor and the oil sector remains weak with an abundance of oil around.
- The old crop soybean meal market remains very firm with a lack of meal available.
- This week’s USDA report left soybean figures unchanged. The market continues to monitor US plantings, where bean plantings are now said to be 71% complete against an 81% average. There has been some drier weather over the past week so plantings should be progressing in key areas. USDA will issue quarterly stocks figures and the first farmer-based planting surveys at the end of the month.
