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Harvest Update - Wednesday 16th March 2005
Interesting developments arose in LIFFE and MATIF futures
on 15-3-05 with talk of drought conditions in South West France having
pushed markets higher. MATIF is up 2 euros while LIFFE has rallied nearly
£1 in sympathy. The general tone of the commodity markets worldwide
still appears to be bullish, dry weather being the reason at the moment,
but it is questionable if there are fundamental reasons as it is sometime
yet before new crop.
There is no doubt that farmers are in no hurry to sell either old or
new crop wheat. It still appears to be a sellers’ market with a
slightly firm tone in the UK. However French and German cash markets,
are struggling over the negative implications of intervention wheat.
Cash markets there appear to be flat even in the light of higher futures.
US futures are firm again with the funds undoubtedly adding to existing
long positions. Expect continued high volatility in the markets.
Harvest Update - Monday 14th March 2005
European Export
EU restitutions granted week ending 11/03/05 were a disappointing 2k
at 10 euros. It is apparent that the next volume granted will probably
need to be up to nearly 13 euros. Look for this to be the case week
ending 18/03/05. The EU has also announced a tender for export intervention
for the period 31st March through 23rd June 2005. Targeted are 80k Austrian,
300k Czech, 93k Polish and 320k Hungarian wheat. This is an attempt
to alleviate some of the tight storage in land-locked countries.
UK Market
The UK cash wheat market continues to be firm. There has not been a
significant change in the volume traded over the past 2 weeks, but the
price trend is gradually higher. LIFFE old crop futures have been flat
to slightly weaker over the past 2 weeks, while premiums have been steady
to firm for both biscuit and breadmaking wheat, with more focus on May
forward positions than nearby. New crop futures are unchanged with minor
firming. While there continues to be little interest from farmers to
contract for Autumn, there has been an increase in purchase enquiries
for the start of harvest. With uncertainty about the weather ahead it
is difficult to say if the current prices are justified.
World Market
The world Supply & Demand figures still point to adequate supplies
in the year ahead. World wheat markets are highlighted by the increase
in fund purchasing in the US. Wheat futures have recently tended to
disregard the fundamentals being pulled along by other commodities;
they have rallied 10% since mid February. While professional funds now
have long positions they are not close to record long positions set
in the past year. Renewed inflationary pressure may add fuel to commodity
markets in general over the short term.
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