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Wheat Market Update - Friday 19th January 2007
UK & Europe
Old crop wheat remains well supported at current levels and processors
are quietly returning to the market to increase their forward cover.
UK exports are widely expected to be 1.3mt by the end of January, leaving
a 700k exportable surplus for the remainder of the season.
Farmers are selling wheat once again. However with less than 20% of
the crop remaining unsold, many are reluctant to sell, hopeful of a
sharp demand driven rally before the end of the season.
Intervention grain continues to be released by Brussels and has contributed
to holding prices at current levels over the last few weeks.
New crop wheat development is beginning to raise some concern as the
mild winter currently being experienced has advanced the crop too quickly.
A return to colder weather will be detrimental to the advanced nature
of the crop and could be a signal for firmer prices.
World Wheat
US futures have been extremely volatile over the last week or so. USDA
figures were bullish for corn, highlighting increased demand (ethanol)
and lower production last harvest. Wheat futures have been a follower
of corn futures and remain well supported, especially as firmer corn
prices will see a switch in feed consumption from corn back to wheat.
Summary
After a quiet start to the year the market is beginning to pick up.
The return of the processor looking to increase cover has been seen
as supportive. With UK Supply and Demand still perceived as tight, little
downside to the market can be expected in the short term.
Wheat Market Update - Friday 5th January 2007
UK & Europe
Wheat markets have been very quiet over the holiday period which has
continued into early 2007. Focus is now switching to Supply and Demand
for the remainder of the season, with progress being made to export
the UK surplus.
With 1.3 million tonnes estimated to have been shipped by the end of
January, end of season supplies could become tight with only 500-750,000t
of the surplus remaining. This coupled with a lack of farm selling,
could lead to and upward movement in prices, especially if it coincides
with an increase in processor demand.
Crops around Europe are generally benefiting from the mild winter.
However concerns still remain that with such a low projected carryout
figure, any deterioration in crop condition would be a catalyst for
an upward price movement in new crop LIFFE futures values.
New crop prices still remain well supported. This will continue until
traders can be certain of increased production.
World Wheat
US futures have eased a little as export demand is slow at present.
In addition growing conditions for winter wheat have been favourable,
as recent moisture in the Midwest has been welcomed.
The next USDA report is due week commencing 8th January, which will
provide information on winter wheat plantings.
Summary
Focus now switches to; export progress, processor demand, and wheat
crop conditions around Europe. With a high degree of uncertainty in
place, and set to remain so, price support for old and new crop wheat
at current levels can still be expected.
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