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Wheat Market Update - Friday 30th March 2007
UK & Europe
The wheat price rally seen over the last two weeks has stalled. The
USDA plantings report issued today, indicating increased plantings for
Wheat and Corn has sparked a sharp sell off in Futures market across
Europe and the US.
With the UK exportable surplus widely agreed at 2mt, supply and demand
still appears tight. It is unlikely that values will fall much further
in the short term against this backdrop.
Earlier this week official UK January export figures were released
indicating that exports had reached 1.3 million tonnes for the season.
Projections indicate that exports should reach 1.7mt by the end of March.
New crop futures have also drifted on the back of continued ideal growing
conditions. As crops emerge from their winter dormancy, much now will
depend on this summer’s weather and its impact on quality and yield.
World Wheat
As stated above, USDA plantings figures have confirmed increased plantings.
Especially on Corn in response to continued growth in the Ethanol market.
World production looks set to increase this season but will rely on
ideal weather conditions across the globe.
Summary
The International Grains Council (IGC) has forecast world wheat production
at 624 million tonnes. It has however also increased consumption to
622 million tonnes.
With this increase in consumption forecast, it is vital that wheat
yields are not adversely affected by any weather concerns.
Wheat Market Update - Friday 16th March 2007
UK & Europe
European old crop futures markets have risen over the last two weeks.
A combination of processor demand and lack of farmer selling has once
again been the contributing factor. UK values have risen by £2.50
with May futures returning to levels not seen since the middle of January
(£98/t).
Logistical problems in France with boats waiting to load export wheat
has created a tightness in spot supply and prices have firmed.
Stategie Grains released a report this week stating that the outlook
for the remainder of the 2006-07 marketing year is ‘fragile’,
due to well balanced wheat supplies.
The UK Supply and Demand situation still provides the potential for
an end of season rally, especially if unsold grain remains difficult
to purchase at current levels.
Most of the EU intervention stock is expected to have been sold by
the end of the marketing year. This is still a concern of many traders
who fear that any weather concerns impacting on new crop potential yields
will lead to higher new crop prices.
At present European crops remain generally in good condition, and even
ahead in certain areas. New crop prices remain unchanged but still have
good underlying support.
World Wheat
The main feature in US markets over the last two weeks has been the
level of fund selling. Traders have seen little bullish news and potential
export business to North Africa has recently been lost to Russian wheat.
Chicago May wheat futures have dropped to levels not seen since last
September.
Ideal weather conditions have also contributed to easier new crop values
and, as in Europe, the market remains wary of any change that would
impact on crop potential.
Summary
European futures markets have divorced themselves from the recent falls
seen in US values. Ideal weather conditions continue to raise optimism
for maturing crops around the globe, but prices will not be discounted
until this optimism becomes a certainty.
Wheat Market Update - Friday 2nd March 2007
UK & Europe
The recent heavy falls in World stock markets were initially taken
to be a selling signal for Agricultural Futures markets. Traders were
concerned that Fund money, a long term key feature particularly in US
markets, might be exiting commodities.
The market has settled down after some wild swings, with Futures values
in the UK and France remaining at a similar level as two weeks ago.
Physical markets continue to be quiet, but with underlying support
from processors at current levels, short term downside appears limited.
New crop prices will continue to be supported at current levels, until
such time as the market is convinced that production will reflect the
increase in plantings seen this season.
Conditions remain ideal at present, but the fear still remains that
any weather scares will be the signal for the market to rise.
World Wheat
The IGC (International Grains Council) raised its production estimate
for 2007/08 to 624 million tonnes (590mt 2006/07). This was in line
with recent increases indicated by the USDA.
US wheat Futures look set to continue following corn Futures, as the
focus is still the increase in demand for corn, as ethanol production
rises.
Debate continues over how much will be drilled during the approaching
spring wheat planting season, opinions vary widely on the final figures
expected.
Summary
World weather developments are increasingly becoming the major feature
at present. Old crop will run its course over coming months creating
opportunities on both sides of the market. However, like last year,
the market focus will gradually switch to Global crop development.
Uncertainty over these developments will likely keep prices supported
over coming months.
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