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Wheat Market Update - Wednesday 23rd August 2006
UK
Unsettled weather continues to delay harvesting of the remaining 30-40%
of UK wheat crop. Producers are very reluctant to sell any quantities
of wheat forward while; they watch the market price of their crop increase
due to processor demand for nearby deliveries, and concerns that the
balance of the UK wheat crop will be of lesser quality than that cut
before the rains. This sentiment is spilling into the trade with merchants
and cooperatives working to cover their own sales before looking to
offer any new business.
Prices for UK feed and bread making wheat have increased again this
week, should the unsettled weather continue as forecasted we could expect
this trend to continue for some weeks if not months to come.
EU
Although the French wheat harvest is complete, producers and traders
are refraining from offering any quantities of wheat onto the market,
thus driving up the European wheat price as processors look to cover
their nearby needs. French wheat is now uncompetitive on the world market
but still continues to increase in price almost daily as domestic EU
demand outstrips supply.
There is still wheat to be harvested in Germany and in the central
Eastern EU countries. These regions have also suffered from unsettled
weather and traders are now talking about much lower quality being available
from wheat that is still to be harvested.
World
The size of the harvested wheat crop in Canada, Australia and Argentina
will still have a big influence on the direction of global wheat prices,
but there will not be a clear picture of this for some months to come.
Summary
Unsettled weather is still delaying harvest progress in the UK and
other key EU wheat producing regions. Whilst this continues we could
expect higher wheat prices in the UK and the rest of the EU, certainly
more price volatility until supply can catch up with the demand we see
in the marketplace.
Wheat Market Update - Thursday 17th August 2006
UK & Europe
Rain across Northern Europe has stalled harvest progress this week
raising more concerns that the quality for wheat still waiting to be
harvested is deteriorating. Very little wheat remains to be harvested
in France and now market focus has switched to the UK, Northern Germany
and also the East European accession countries, where rain is also hampering
harvest progress and causing concern about what the quality of the wheat
will be when it is eventually harvested.
Estimates suggest around 70% of wheat in Southern England has been
harvested with between 40-50% in the North. The samples tested from
the wheat that has been harvested in the UK continue to show a wide
variation in quality, and prices continue to reflect this remaining
significantly higher than a year ago. Most bread wheat sales are largely
confined to nearby positions as producers, merchants and processors
continue to build a picture of overall quality and likely price direction.
Demand from animal feed producers for feed wheat is continuing as they
have to cover nearby requirements, this is supporting the feed base
price. French futures prices (Matif) remain well supported with UK LIFFE
feed wheat futures following and trading at higher prices this week.
Strategie Grains released their August estimate of the EU 2006/07 wheat
production and once again reduced their estimate indicating a figure
of 6 million tonnes lower than July at 110 million tonnes (v 115 2005/06).
North America
Widespread rains have disrupted progress with the spring wheat crop
harvest. 50-60% is estimated to have been cut and quality reports remain
good, but yields are variable. The USDA Production Reports continued
this week to highlight the global reduction of wheat stocks and reduced
production in key wheat growing regions.
Summary
With harvest temporarily halted by rain this week in Northern and Eastern
Europe speculation has continued over the final quality that we can
expect of the wheat crop, and as a consequence the likely price direction
with prices increasing on the week. There is little news surfacing that
would suggest prices will ease back from current values and with further
concerns still evident surrounding other key production areas this scenario
looks set to remain for the time being.
Wheat Market Update - Thursday 10th August 2006
Europe
The French harvest is now some 90% complete after the recent dry weekend.
Quality in Northern France has continued to show the variability seen
throughout the rest of the country. A lack of producer selling is keeping
prices high against demand from feed compounders looking for nearby
requirements. The recent rally in French maize prices is holding, further
volatility in this market is expected until such time as quality and
yield are established, and the market is factoring that some reduced
yields are likely as a consequence of the hot weather in July.
Recent rains have stalled harvest progress in Germany with some 50%
of the wheat crop still to be harvested. Prices in Germany are also
up due to processor demand against a lack of producer selling.
In the UK estimates are that some 60% for the wheat crop has been cut
in the south, with the north between 20-30% harvested. Reports from
producers and merchants remain similar to last week with quality and
yield still being observed as extremely variable. The market for bread
wheat remains relatively illiquid while the producer, merchant and processor
await a clearer picture of the overall crop quality and quantity. However,
quoted prices remain significantly higher than a year ago.
LIFFE feed wheat futures remain well supported from buying interest
from funds and feed grains processors and we will continue to see UK
feed grains prices tracking alternative grains markets market.
North America
With 30% of the spring wheat harvested, yields are still reported down
on last year, however quality is reported to be ok so far. Funds remain
long of soft commodities futures markets including the US wheat futures,
and will look for any signs of further 'bullish' news that could spark
further rallies.
Summary
The European harvest this season would appear to be of greater variability
than last season and overall the quality so far is not reported to be
a good as last year. Over the coming weeks the focus will switch from
production estimates to demand forecasts within the EU and globally,
plus we expect continued volatility as these statistics and traders
views are finalised.
With concern still being expressed over the drought impact on the Australian
crop, and further concerns over a lower yielding Canadian wheat crop,
world wheat supply and demand remains finely balanced, and can ill afford
lower production in any key producing area. A consequence of which would
be further price increases.
Wheat Market Update - Wednesday 2nd August 2006
UK & Europe
Harvest is now 75% complete in France and reports on quality still
indicate a very mixed crop. Low proteins are being widely reported and
latest yield estimates continue to indicate a lower crop figure than
was previously expected. These factors have combined to keep sellers
from committing to volume sales of new crop while the remainder of the
harvest is gathered in and the actual quality and quantity if the French
wheat crop is known. The French maize crop has continued to suffer from
the heat wave and will provide further support to wheat prices. The
German wheat crop yields have continued to be reported as lower than
estimated and in some areas by as much as 10%. Again this is keeping
sellers from committing to volume sales of new crop while the remainder
of the harvest is gathered in.
UK wheat harvesting has continued this week, in between the rain storms
experienced in parts of the country. Reports from the UK supply trade
are stating that very variable quality is still evident, with proteins
lower than last harvest and the yield reports stating that they are
still below expectations. The price for bread wheat in the UK for this
new crop remains significantly higher than a year ago, supported by
the quality and yield concerns in the UK and the rest of the key wheat
growing regions in the world. LIFFE feed wheat futures have also remained
close to contract highs and remain well supported as traders continue
to factor in a smaller than expected crop.
North America
Good proteins continue to be seen in wheat as harvest continues, however,
weeks of extreme heat have taken their toll and overall quality wheat
production will be lower.
Summary
France and Germany have experienced a lower yielding smaller than expected
crop to date with very mixed quality. Reports from the early harvesting
in the UK suggests we will see the same. The heat wave during July caused
irreversible damage to wheat crops across Europe, reducing yields. This
week the IGC (International Grains Council) have once again reduced
their global wheat production estimates and reaffirmed the position
that global stocks of wheat are projected to fall to 25 year lows.
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