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Wheat Market Update - Friday 15th December 2006
UK & Europe
As we approach the end of the year grain markets slip into a period
of dormancy. Little fresh news has been reported, and prices have remained
relatively static.
Debate continues over the level of processor demand due to resurface
in the early stages of 2007. This factor remains the key element for
price movement in coming weeks, and could be the springboard for a lift
in values depending on the scale of the demand.
Weather conditions remain unseasonably mild, bringing continued concern
that crops are developing too quickly. A cold snap would be very welcome
for arable farmers across Europe. However, with ending stocks in Europe
50% lower than last season, any adverse weather conditions threatening
next seasons production, would be the trigger for a new crop price rally.
New crop prices continue to maintain very good support at current levels.
World Wheat
This week Egypt purchased 250000t of wheat split between the US, Argentina,
Russia and France.
US markets have been mainly quiet as we enter the holiday season. Continued
dryness in US Southern plains remains a supportive factor for prices.
Summary
Prices look set to remain well supported at current levels as we go
through the Christmas season.
2007 will bring new challenges, with global ending stocks at a 25 year
low, crop development and future Supply and Demand will be closely monitored.
Wheat Market Update - Friday 8th December 2006
UK & Europe
The market has lacked any fresh news this week, however both LIFFE
and Matif futures have experienced some profit taking, partly attributed
to Egypt bypassing European wheat and buying US wheat at its recent
tender. Cash prices however remain robust and have remained firm with
a continued lack of merchant selling very evident.
Market indicators continue to support the view that processors will
soon be tempted back to increase their New Year cover. The timing of
this return still remains uncertain.
The pick up in demand will push values higher, especially after the
relatively quite trading period seen over the last few weeks.
Export pace is being closely monitored, with some merchants indicating
that more than 1 million tonnes of the UK’s 1.7 million tonnes
surplus may be exported by the end of December. This is also reducing
the level of cash offers being seen for New Year positions, and in many
areas the premium for quality wheat over feed and futures is widening.
New crop prices still find good support at current levels.
World Wheat
The Australian wheat harvest is now 50% complete with crop estimates
still ranging between 9-10 million tonnes.
US markets have drifted slightly as fund selling has been evident due
to year to date export sales still behind expectations.
Summary
The market continues to await fresh news to determine future price
direction. Processors will return to increase their cover, the timing
of this return would appear to be approaching.
Wheat Market Update - Friday 1st December 2006
UK & Europe
The European markets are relatively quiet with prices still supported
at current levels. Buying interest from processors is still expected
to return for New Year requirements. This is a major contributing factor
in limiting any downside to prices. The scale and timing of this demand
remains unknown but could lead to a sharp rally in prices at a time
when originating grain from growers could be difficult.
Weather conditions remain unseasonably mild and crops appear in good
condition. New crop prices continue to see solid support.
World Wheat
Final production figures for Australian wheat still provide concern
to global markets; however the current projections remain low at 9 -
9.5 million tonnes.
US markets continue to express concern over ongoing dryness affecting
winter wheat areas. Firm maize prices are also providing support for
wheat as the US continues to increase ethanol production.
Wheat prices will keep well above levels that might otherwise be seen
due to feed demand switching from maize to wheat. This is despite expected
production increases as a result of increased plantings.
Summary
As the market enters the holiday season, where historically trading
activity remains quiet, the prospect of a return to a period of volatile
prices awaits the market as 2007 approaches.
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