|
Harvest Update - Tuesday 5th April 2005
UK Milling Wheat
Cash premiums remain firm while farmer selling of wheat continues at
a relatively slow pace. Buying interest is focused primarily on May/June/July.
With crop year exports at 2.259mmt through January (and February thought
to be near 300k), it is evident that this year’s carryover will
be near a very manageable 1.9mmt. Farmer interest in selling new crop
is nearly absent. It will probably take a couple of months of crop development
before we see more conviction in pricing for autumn. DEFRA has forecast
acreage at 1.916mln hectares (vs 1.965 in 2004).
World Wheat
The sales of EU intervention wheat began last Thursday with 63k mt
traded from Austria (55k) and Czech (8k) at prices of euro 95.39 and
euro 89.90 respectively. There has been much speculation regarding the
need to ship from Hungary, but the best bid was only euro 79.14. Total
intervention wheat stocks are currently 6.49mmt. Weekly restitution
awards were 154k net at a very disappointing award of only euro 3.9.
That pressured MATIF May futures on Friday to a contract low.
US futures have now given up all of the gains of the past few weeks
as negative fundamentals have come back into focus. Crop ratings there
are better than last year, albeit the acreage is down 2% at 58.6mln
acres. A stronger dollar has likewise helped fuel some of the break
in the CBOT. IGC 05/06 production forecast for world wheat is 602mmt
(vs 623mmt last year).
Outlook
It is too early at this point to formulate a strong opinion about the
direction of prices for next autumn. Growing conditions will be most
important in the coming months. It does appear as though EU prices in
general will have difficulty because of burdensome old crop stocks,
while UK old crop is influenced by a tighter carryover.
Harvest Update - Friday 29th April 2005
UK Crop
U.K. growing crop looks to be in good condition at this time. While
rainfall in the south of the country has been below average this winter,
there is no cause for concern yet. Timeliness of additional moisture
this spring and summer will be more critical in the overall development
and quality.
World Crop
There are some dry pockets in the world that are starting to get a
little more attention, although; China is said to be a little dry in
areas, Australia is at the planting stage now through the end of June
(latest), and are in much need of rain. Reference is already being made
to the conditions Australia suffered 3 years ago when they had the worst
drought in 100 years and harvested 10mmt of wheat (vs. normal of closer
to 24mmt). Portugal and Spain droughts were documented earlier and as
a result, Portugal is seeking 500k mt from intervention feedgrain stocks.
It would appear that the better part of this amount in being worked
out from eastern EU stores. Canada has areas which could use some moisture
as well and warmer temperatures. It's too early to determine what impact
current world weather conditions may have on yields, even though it
would appear the world crop will be adequate this coming year, there
is still the potential for weather problems to influence yields in a
few key areas and impact world prices.
Futures & Cash
LIFFE was weaker 29-4-05 on very light volume ahead of the bank holiday.
Cash markets are generally not following along however, meaning a slight
strengthening in premiums. Barring a weather related problem, both LIFFE
and MATIF should be in tight trading ranges for the balance of old crop.
U.S. futures continue to be under the periodic influence of funds. Fundamentals
are thrown out the window when the funds figure it is time to buy commodities.
Earlier this week saw wheat futures climb over 5% in one day.
Free market restitutions were granted by Brussels this week for 194,900mt
at max 5.89 euros. Intervention wheat was sold from Czech (54,240 at
91.22 euros) and Slovakian (51,523 at 92.31 euros) stores. These purchases
and awards by Brussels are still deemed to be at a rate slower than
needed to manage building stocks.
|
