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Harvest Update - Monday 22nd August 2005
UK Harvest
Southeast harvest is the better part of done at this time and quality
continues to be good. Across the U.K. we’re approaching 50% done
and, once again, quality has not disappointed. General rains have now
ceased harvest for a couple days in all but the far north. There should
not be any immediate quality concerns unless the weather pattern shifts
to prolonged moisture. While premiums are holding relatively steady
and futures down a bit, farmer selling is still not very prominent.
U.K. feedwheat for export remains noncompetitive in the world market
and is yet a negative factor on LIFFE. Key for milling wheat is focus
on premiums and quality for remaining harvest. Both will get a more
clear direction next week.
European Harvest
German harvest has been slowed due to a lot of rain in the past 10
days. Harvest is resuming once again in the north, where the bulk of
the 50% of the crop remains. Nervousness about quality persists here
as well. Spreads for highest protein German E have risen in comparison
to German A over the past weeks. German E varieties are also being grown
in Latvia and Lithuania where it has been wet as well. More harvest
is needed to draw a true assessment of any potential quality problems.
German A wheat is noncompetitive yet to the U.K. French harvest is basically
done, with no major concerns about quality. Generally speaking, intervention
stocks continue to keep somewhat of a lid on European feedwheat.
North American Harvest
DNS harvest is progressing, while the hot topic is vomitoxin. Premiums
for milling quality remain at season’s highs as terminals assess
the extent of vomitoxin levels. As wheat is segregated in the coming
weeks, the marketplace will have a better picture as to the extent of
any problem. Similar to the rest of the world, farmers are reluctant
sellers at these prices. Minneapolis futures have been rangebound for
the better part of the last month, while currency and premium movement
has been a more prominent feature. Canadian harvest is getting underway
over the next couple weeks. The outlook there is for a better proportion
of 1CWRS certainly than last year. Early protein discussion seems to
center around a crop close to 13.5% average protein.
Summary
Key to the market is the usual discussion of late…quality and
amount of farmer selling. Market is likely to react more in terms of
premiums than futures prices. That means watching the LIFFE may not
give a true picture of what is going on in the wheat market.
Harvest Update - Monday 8th August 2005
UK Harvest
We are now into early stages of harvest with activity seen primarily
in S.E. England and lesser amounts moving north into the East Midlands
(Corby area). There will likely be some southwest harvest over the next
week. Total U.K. harvest remains below 10%. Early yield results have
been about average while quality has been reported as mostly good. There
have been brief interruptions due to rain, but it isn’t thought
at this time to have negatively affected quality. The forecast looks
promising this week. LIFFE futures have risen slightly last week even
in response to the good initial harvest. There appears to be good buying
interest underpinning the market anytime we approach the £68 level
for November. Likewise, there are few expectations for a rally beyond
recent highs. Premiums continue to merit close attention though and,
should farmer selling dry up, are likely to rise across the board.
European Harvest
With over two-third’s of total harvest completed in France only
the northern growing regions remain. There are some concerns about quality
in this remaining harvest. There are more widespread concerns at this
time with the German harvest where early test results show low bushel
weights. The U.K. relied on an abnormally large amount of German breadmaking
wheat this past year (in light of a below average Gp 1 crop) and thus
will be watching quality of the German crop closely. We have already
seen a poor quality harvest in parts of Hungary and Bulgaria.
Other World
Dryness in Argentina has reduced the planting estimates by nearly 15%
vs. year ago. Meanwhile, U.S. spring wheat harvest is about 10% done
and there are reports of the presence of scab in some regions. It is
too early to generalize about the remaining U.S. harvest, but some merchants
have raised premiums recently by more than £3 due to quality concerns.
U.S. wheat futures are still thought to be overpriced by many, but have
not been able to shake loose from the effects of the strength generated
from row crop futures. The same spring wheat quality concerns in the
U.S. will be a focus for the Canadian harvest, where pockets of excessive
moisture have drawn attention.
In general, there continues to be a forecast of adequate world wheat
supplies. Quality is once again the focus.
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