|
Wheat Market Update - 27th February 2006
UK & Other EU
• Milling wheat trading volumes have been relatively steady for
the past few weeks, while feedwheat trade volume spiked to a crop-year
high in mid-February.
• Old crop LIFFE futures are nearly unchanged from late January,
while new crop is up about £0.50.
• Russia and Ukraine are likely thru the worst part of their winter,
however damage done to the wheat crop in January will likely not be
assessed until early to mid spring. Estimates thus far are that 30%
of the crop has been damaged. Meanwhile, very dry conditions continue
in the South East of the U.K. and parts of France and Spain. Weather
concerns will likely support new crop.
• Bread wheat premiums have firmed only slightly over the past
couple weeks, but remain at historically low premiums to biscuit wheat.
Expectations are that bread premiums will shift to more “normal”
levels in new crop. Consequently, bread wheat prices are rising steadily
into harvest.
• Biscuit premiums are at small premiums to feedwheat currently.
Normal carrying charges are in place for the coming months, with very
little discount coming into play for the early harvest months. Currently,
it appears that new crop prices are very similar to today’s nearby
market.
• France recently sold 240k mt wheat to Egypt for late March.
• The EU continues to sell small quantities of wheat from intervention,
however free market cash awards have been declined recently.
• EU and Russian shipping logistics are still suffering from cold
weather and low water.
World
• U.S. futures prices have climbed significantly over the past
month. Initial support stemmed from ongoing dry conditions in the southern
Plains states (HRW area) and professional fund buying. That focus shifted
to a pending Iraq tender for up to 1 mmt of wheat…an interest that
has yet to be finalised. Last rumors are that up to 1.5 mmt may eventually
be agreed from both Canadian and U.S. origins. That demand, though,
is probably no more bullish to futures than the ongoing dry weather.
Latest weather forecasts do not favour significant relief for the driest
areas over the next two weeks.
• Normally one might expect premiums to suffer in a rising cash
market, however DNS levels have remained about unchanged over the past
month. It remains to be seen if the higher cash prices will coax more
DNS plantings this spring.
|
