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Wheat Market Update - Thursday 30th July 2009
UK and Europe Harvest Overview
A lack of bullish news has seen UK feed wheat futures reaching a new low for 2009 whilst harvest pressure, large carryout stocks and increasing feed grain competition continues to weigh on markets. Premiums for bread making wheat, however, remain firm at present amid uncertain weather conditions in the UK and Europe and no definite guarantee over quality.
With UK and European harvests underway all attention is now focused on the weather outlook. Early samples of UK milling wheat have been encouraging with good protein levels recorded. Weather events over the next few weeks, however, will be crucial in determining final wheat quality and any prolonged period of rainfall could quickly have a negative impact.
US/World Overview
Scarce fresh forward demand and a lack of bullish news have offered little support to wheat values on U.S. futures market. Harvesting of winter wheat in the US is progressing well, with 79% harvested by 26th July (same as last year) whilst the spring wheat crop is 93% complete. Spring wheat protein levels and yields are reportedly excellent.
As of the 23rd July, Russia had harvested 19% of their crop and Ukraine had harvested 63%. Meanwhile, Egypt has resumed imports of Russian wheat; however, reports now suggest that loads of wheat originating from Ukraine and Australia have now been re-exported over quality issues.
Summary
It is still too early to gain a genuine understanding of UK and European wheat crop yield and quality as the weather over the forthcoming weeks will have a considerable influence on these final results. At present, bread wheat premiums appear to have divorced themselves from futures markets and are likely to remain robust in the near term.
Wheat Market Update - Friday 17th July 2009
UK and Europe Harvest Overview
In this pre harvest period a level of stability is being seen in relation to both prices and premiums, reflecting limited information as yet about the current crop.
Volumes traded are expected to be very limited until more is known about the forth coming harvest which is likely to be delayed by the current rain and overcast weather conditions.
The UK harvest is expected to be in full flow by mid August with Germany probably getting underway in the South in 2 weeks and in the North in 3 weeks.
US/World Overview
The US winter wheat harvest is 66% complete as of last weekend, slightly behind last year.
US wheat prices have fallen substantially in recent weeks with the continued bad news appertaining to the Argentinean crop having little impact. Prices seem to be finding a seasonal bottom with bullish movements unlikely due to adequate supplies and dragging demand.
In the long run there is concern about the potential of new US regulation in the wheat futures markets, which as a consequence could move prices downward due to speculator forced selling.
Summary
Any European wheat market movements at present are trading based on corresponding movements in Equity and Oil markets.
We don’t expect any fundamentally defined direction in the market until we have sufficiently progressed into the coming harvest.
Results coming through from the French wheat and Barley harvest are promising but weather conditions in late July early August remain the key fundamental driver to determining overall crop quality.
Wheat Market Update - Thursday 2nd July 2009
UK and Europe Harvest Overview
Harvest is progressing well in Southern Europe and here in the UK wheat crops will be benefiting from the current fine weather.
UK wheat harvesting could commence within the next 4 weeks, with early yield and quality reports eagerly anticipated.
Wheat futures markets across the globe have fallen sharply over the last few weeks, as rainfall has allayed concerns that production figures would be marked down. Traders have, however, continued to report low levels of physical wheat trade, with growers reticent to sell ahead of harvest at current lower prices. New crop breadmaking premiums are also unlikely to be discounted ahead of better knowledge of harvest quality.
US/World Overview
The latest USDA plantings and stocks report issued this week surprised the market and initially sent futures markets into a ‘tailspin’. Corn and wheat plantings figures were all higher than trade expectations which, for the latter, could mean the prospect of the second largest crop in history.
Global wheat supply should keep ahead of demand moving into 2010 and with the winter wheat crop 40% complete in the US, final yield estimates will be closely monitored.
Summary
Wheat markets globally appear heavily oversold and arguably require a consolidation period at present.
Market Fundamentals of Supply and Demand have finally stamped their authority on price direction over the last few weeks.
With harvest rapidly approaching in Northern Europe, quality outcome will be a ‘key’ factor, and with a few early reports in the US that some quality has sacrificed to yield, it should not be assumed that breadmaking premiums are on a downward path here in the UK.
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