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Wheat Market Update - Wednesday 16th January 2008
UK & Europe
Wheat market prices across Europe have started 2008 on a firm note.
Although export pace has slowed somewhat, with many export silos full,
increased processor demand has not yet materialised and it is the US
market that has once again led to firmer prices.
The UK farm ministry lowered the UK wheat crop from 13.36mt down to
13.14mt, which was seen as supportive to values especially with the
much smaller exportable surplus the market has been trading this season.
Russia is set to increase its export taxes this month, in a move designed
to limit the amount of wheat leaving the country.UK wheat remains at
a competitive discount to French wheat and is well placed should export
demand pick up again.
New crop values have risen sharply following the rise seen in the US
after the release of last Fridays latest USDA report
World Wheat
US markets rose sharply last Friday when the USDA surprised the market
by releasing much lower than expected winter wheat plantings.
Trade expectations were for plantings to be around 48.5m acres, however
plantings were put at 46.6m acres.
Argentina’s wheat harvest is around 80% complete, with good yields
reported. The government has kept the export ban in place and this is
expected to remain the case until harvest is complete.
Summary
The surprise of last weeks USDA report provided the first opportunity
for market ‘bulls’ to lift values sharply.
New crop November 2008 LIFFE wheat futures have risen £12/t since
the start of the year and now are trading at £153/t.
Price volatility will continue to be seen over the next few months
as traders monitor crop development across the globe.
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