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Wheat Market Update - Thursday 28th November 2007
UK & Europe
A lack of farm selling and the return of processor demand has fuelled
a rally in European markets, additional support has come from sharply
higher US futures prices.
Traders report that upto 80% of the UK wheat crop has been sold already,
with producers gaining more confidence that this seasons bull run is
far from over.
Supply and Demand fundamentals have returned to support the market
with the balance sheet appearing much tighter than in previous seasons.
Bread making and biscuit premiums have remained very firm, and in some
areas have moved higher, helped by short covering from trade buyers.
World Wheat
US markets have risen sharply as continued dry weather in the Great
Plains has lowered crop ratings once again.
India also issued an export tender this week for an unspecified volume
requiring delivery by Mid December.Traders viewed this as bullish as
it is further volume being taken from an ever tightening Global Supply
and Demand picture.
The Global Grain conference last week in Switzerland announced that
global production of wheat was expected to recover to 648mt in 2008-2009.
This figure assumed ideal growing conditions this season, and if materialised
should prevent a repeat of this seasons dramatic price rise.
Summary
As we approach the holiday season the market looks set to enter the
second half of the season on a much firmer footing.
Price volatility looks set to continue, with traders continuing to
express caution that although a recovery in global production is indicated,
ideal weather conditions will be required across the globe for this
to happen.
Wheat Market Update - Thursday 15th November 2007
UK & Europe
European Futures markets have drifted lower over the last 10 days following
easier US markets, and a lack of nearby demand. Traders are waiting
to see if EU wheat starts to fill export demand left by the export tax
on Russian wheat supply.
Processor demand will feature again for New Year positions but buyers
remain cautious at present having seen the market fall to 3 month lows.
It is both interesting and concerning to note, that although UK futures
have fallen, premiums for bread making wheat have risen sharply. This
rise has been contributed to a lack of farmer selling, and merchants
wishing to lock in profit on sales made back in September when the market
was at its peak.
Benchmark Liverpool Group 1 bread making premiums are trading at a season
high of £55/t over UK futures, and have the potential to rise
further if met by more demand.
The net effect of this has negated the fall in futures and the flat
price has remained the same.
World Wheat
US markets remain weak as export sales have slowed and no fresh bullish
news has appeared. Some concern is developing over possible dryness
in US Winter wheat areas with condition ratings lower than a week ago.
Argentina has started harvesting, and in the short term looks set to
remain a competitor with the US for wheat exports on the world market.
Summary
Long term fundamentals look set to return for old crop in the New Year
with an ever tightening UK balance sheet set to be a key price driver
over the coming months.
New crop plantings are up 12% which based on average yields indicate
that the UK wheat harvest for 2008 should be in the region of 16mt.
Wheat Market Update - Thursday 1st November 2007
UK & Europe
A quieter period after the volatility seen last week, with trading
volumes very light. Farmer selling remains light, with the view that
65-70% of farm grain having been sold already this season. Processor
activity is also quiet which would indicate that cover is adequate to
the year end.
It is interesting that the physical market continues to react very
slowly to the volatility seen in futures markets over the last few weeks.
Bread making premiums look set to remain firm over coming months. This
trend looks set to continue with Supply and Demand a key price driver
for the remainder of the season.
World Wheat
The Australian Government released their latest estimate for wheat
production this week, indicating that the crop will now only realise
12.1mt. This is down from their estimate last month of 15.5mt, but still
above last season’s 9.8mt.
US markets absorbed the news and sentiment remains that the market
has already factored these figures into recent price movement.
Tenders from India for a further 1mt of wheat have done little to spark
any further rallies in US futures this week.
Summary
A lack of fresh news and traders wary of unchanged fundamentals has
led to a ‘sideways’ market this week.
Bread making premiums remain well supported at current levels.
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