|
Harvest Update - Friday 24th June 2005
UK Crop
Old crop sales of wheat have picked up in the past couple weeks, but
that has come primarily from sales of feedwheat. LIFFE July futures
were particularly weak yesterday in light of today being first notice
day for delivery and buyers not wanting feedwheat in-store Scotland.
September and forward months, however, are moving rather independently
of July futures, and milling wheat prices have remained about unchanged.
Farmers continue to be reluctant sellers of the growing crop and seem
willing to take the price at harvest given the current market. Expect
the entire milling wheat cash market to be in a tight range until there
is a clearer picture of U.K. harvest quality. Timing is everything when
it comes to harvest and weather. At this stage a year ago it was thought
that there was a good quality crop coming. But then again, last year’s
harvest was a one in twenty or thirty year event….wasn’t it?
World Crop
At this time of the year, often the best thing that the market finds
to talk about is weather. Certainly that has been the case of late.
No where has this been more evident than in the U.S., where the impact
of dry weather is influencing the corn and soy crop and consequently
pulling along the wheat futures as well. Wheat prices have risen in
the U.S. by nearly 5% in the last 7-10 days in the face of an already
strong dollar (relatively speaking). Harvest is also underway, and that
would normally limit price rises at this time. However, the influence
of funds will continue to be felt and weather forecasts (which seem
to change daily) will mean a volatile market. Other areas that have
been dry are Spain, France, S.E. U.K., and Argentina. Eastern Australia
has finally got some relief and talk of a 16 mmt crop has now grown
back to 20 mmt. Following is a brief summary of some key markets:
U.S. -
· Ending stocks forecast to rise by 4 mmt as export projections
for 05/06 decline by a similar amount.
· Recent price rise driven by lack of rain in Delta and key eastern
corn/soy areas.
· Fundamentals do not support recent wheat price increases.
· Premiums remain very firm for old crop high protein wheat.
Canada -
· Tight old crop logistics for high quality/high protein milling
wheat.
· Production estimate by Stat Can is 22 mmt (vs. 25.9 mmt 04/05).
· Growing crop getting more heat and sunshine. Moisture adequate.
Argentina -
· Still too dry for planting in areas, hence planted acres will
decline.
· Production estimates near 14 mmt (vs. 16.3 mmt 04/05).
Australia -
· Very wet June in eastern areas has boosted potential for crop
to 20 mmt.
· Western growing areas with good moisture previously.
EU -
· Still very dry in Spain and parts of France.
· All wheat production forecast near 120 mmt (vs. 124.9 mmt 04/05).
· Strategie Grains forecast all grains 263.5 mmt, down from previous
forecast of 266.1 mmt (vs. 286.9 mmt 04/05).
· Spain granted 500k mt grains from intervention stores.
· Weekly intervention sales totaled about 38k mt from Czech/Hungary/Lithuania.
Other -
· China and India each forecast to have a crop production increase
of about 2.5% this year.
|
