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Harvest Update - Friday 25th February 2005
Restitutions granted 24/02/05 were 295k at 8 euros. This
compares to the 17/02/05 award of 148k at 6 euros. A total of 757k was
bid this week in a range of 4.8 – 13.97 euros. Most believe we
are at least a couple of euros away from generating new export business
for the EU.
US Markets rallied strongly on 22/02/05 in the light of dry conditions
in S America. That propelled soybean futures dramatically higher and
wheat joined in for the ride. Enthusiasm has waned over the past two
sessions however as traders realise there is little fundamental reason
for sustaining higher wheat prices. The professional funds seem to be
having the bigger impact in these emotional trading days as they rushed
to cover short positions. Whilst there have been some isolated rains
in S America the past day or so, it still merits watching and may yet
be cause for a spike up or down in Mondays trade. Otherwise, the weaker
dollar is partially offsetting the slightly negative EU restitution
trend.
UK wheat markets are firming. Not only are LIFFE futures creeping higher,
but premiums for milling wheat are moving up as well. The UK carry over
still looks to be very manageable. Good exports for both January and
February indicate that we may be able to “coast” for the balance
of the season. Farmer selling continues to be light and the availability
of milling quality wheat is definitely dwindling in pockets of the country.
One would expect pull backs from these levels to be brief and rather
limited.
New crop prices have seen a gradual rise as well. There is even less
focus there currently, as farmers are not driven to put sales on at
these levels. The world supply and demand picture has not changed much
for the autumn crop. The biggest impact will come from the developing
weather patterns as we progress through the next few months.
Harvest Update - Tuesday 8th February 2005
The European Wheat Market
The EU granted restitutions of up to 4 euro on 134,000 tonnes of wheat
on the 3rd February. The objective being to create new export sales
and thereby prevent wheat from going into intervention.
Traditional EU markets for wheat have been supplied by Argentine wheat
this crop year and it is generally considered that larger restitutions
will be needed to generate new sales into world markets.
Reports from southern Europe are expressing concern over the 2005 harvest
due to poor crop growth created by near drought conditions not seen
for 14 years with some areas of Portugal and Spain showing damage already.
The UK Wheat Market
January wheat exports from the UK were reported to be good and expected
to continue.
LIFFE values have been little changed in the past month, farmer selling
has been slow with millers having adequate coverage. The quality of
UK wheat is staying constant with optimism that the early harvested
good quality wheat is still in storage.
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