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Wheat Market Update - Friday 27th April 2007
UK & Europe
Continued lack of rainfall in key crop producing countries around the
world has triggered a sharp rise in futures markets both in Europe and
the US this week.
LIFFE May futures peaked at £102 (a level last seen back in November),
with continued talk of tightening Supply and Demand the main feature.
Against this backdrop expectations remain that prices will continue
to be extremely volatile in the lead up to harvest.
Crops in the UK and Europe are 10-14 days ahead of normal and generally
still in good condition. However, sub soil moisture levels are very
low and are becoming more of a concern across many
areas. This has been the main reason behind this weeks sharp futures
rally.
November LIFFE futures set new contract highs at £98 and look
to have solid support for the time being.
Some rainfall is expected next week across Europe, welcome news to
cereal producers. If rainfall is not significant and a return to the
current dry scenario follows, it is widely expected that prices will
continue to rise.
World Wheat
Planting delays in Corn and a drop in Winter wheat crop ratings as
a consequence of previously reported freeze damage pushed US futures
markets higher this week. Additional support came from news that Australia
continues to suffer from lack of rainfall and Canada cutting production
by 16%.
Like Europe, Australia is forecast some rainfall (the first significant
rains for 3 months), but it remains to be seen if it is enough to assist
parched conditions.
Summary
The IGC (International Grains Council) are indicating a 623 million
world production figure. However increasing demand means that if this
figure is reached it will only increase world stocks by 2 million tonnes.
This would be the lowest stock figure since the mid 1970’s.
World wide weather remains the key to price movement over the coming
months.
Wheat Market Update - Friday 13th April 2007
UK & Europe
Having absorbed the USDA plantings data two weeks ago, which caused
a sharp sell off in futures markets both in Europe and the US, markets
have risen sharply once again this week.
European futures firmed and May LIFFE futures traded over £100/t,
as continued talk of tightening UK Supply and Demand was factored in.
Projections from the Met Office of a dry warm summer was also taken
to be supportive to
New crop values. Whilst good weather should be conducive to good quality,
yields may be lower.
World Wheat
The recent severe cold snap and the potential harm it may have caused
to parts of the US winter wheat crop will probably support futures values
for the next two weeks or so. Growers will need to assess any real damage
caused and the market could potentially be quite volatile in the short
term.
Summary
As has been widely expected the first real weather scare of the summer
has swept through US grain markets. Concerns are also beginning to be
voiced over low moisture levels in Australia, although timely rains
could still quell this concern.
This weeks price movements should not necessarily come as any surprise
due to the low carryout stocks worldwide, and further upside price movements
are a real possibility.
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