Jonathan Lane, Gleadell’s trading manager, comments on grain markets …
Wheat
The announcement from the Ukrainian government of the imposition of an export ban effective from 15th November was not unexpected but, as often is the case, the actual appearance of the statement on news channels was the catalyst for a move upwards in the world wheat complex.
In simple terms, it looks like the USA - the supplier of last resort and highest price - will take over sometime in the New Year as the lead supplier into many of the world’s importing countries, as Russian and Black Sea supplies are exhausted. In the interim, it will be EU wheat, priced competitively versus US wheat, and some tonnage out of Argentina that will be the most competitive for forthcoming tenders.
UK consumers at the quality end of the market are stepping up the pace of imports, as issues with the use of UK supplies continue. This figure will probably rise towards 3mln t, or possibly above, as more consumers make the switch to imports, which would leave the UK as a significant net importer for the first time since the 1970s.
Prices for the 2013 harvest have also risen as plantings struggle to make progress in the UK, parts of France and Germany and in the Baltic States. We certainly need a period of dry weather in many parts of the UK to enable real progress to be made.
The world really needs a good crop in 2013, but firstly we need it to be planted, and secondly, we need a year of helpful weather. Fingers crossed all round!
Oilseeds
This week has seen little fresh news on oilseeds, and eyes are already turning to the November USDA report to provide fresh impetus to the market.
As the US soybean harvest wraps up, the lack of new fundamental news and some uncertainty as to what the next USDA report will bring has led to light volume trade and a fairly range bound market, with technical support and resistance levels becoming more prominent. The soybean supply and demand situation remains extremely tight, with continued strong sales and no signs of usage rationing.
Canadian canola has performed well this week, rallying on the back of strong export sales to China, and canola is up C$5 on the week.
The domestic rapeseed market remains quiet - with little coming forward from farm and light trade, the crush remain fairly absent from the market. Sterling has also strengthened against the Euro this week, with the single currency under pressure from the continued uncertainty around debt and bailouts.
The macro environment hasn’t been particularly supportive of commodities this week with equities performing poorly, continued EU debt problems and US elections looming, this has all contributed to a risk-off approach with traders moving into less risky asset classes, such as bonds and currencies.
