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Harvest Update - Friday 30th September 2005
UK
• Good overall quality
• Farmer selling still said to be tight, thereby providing support
to market price
• Premiums for bread and biscuit wheat steady to firm
• Some good regional demand for feedwheat
• Current export demand quiet
• Imports slow from Germany due to better quality U.K. bread wheat
• LIFFE futures stuck in a £1 range
• Planted wheat acreage this autumn to be down 5-10% as per most
estimates
• U.K. 05/06 crop estimated to be near 15 mmt on recent DEFRA acreage
reduction
Europe
• Free market refund at euro 7.50 (unchanged from last week) for
140k mt
• Russian wheat continues to be aggressively priced
• Coaster freight values firming
• Dry conditions in Ukraine and southwest Russia impacting winter
wheat conditions
North America
• Canadian quality outlook declining; still fewer 1CWRS forecast
• Canadian harvest approaching completion
• U.S. DNS premiums remain firm and a stronger dollar pushing prices
higher on a sterling basis
• Good U.S. wheat exports in recent weeks
• Ocean freight firming
• MGE futures at seasonal highs tied to quality concerns
Harvest Update - Thursday 8th September 2005
UK Harvest
All of the U.K. wheat harvest is now complete except for a small percentage
remaining in Scotland. Quality looks to be good this year. There are
however some pockets with variability (especially those affected by
some late season rains), but in general the trend has been toward slightly
higher proteins and hagberg than last year.
Premiums for quality milling wheat appear to have made harvest lows
and have been firming for the past couple weeks. Farmers are still disappointed
with cash prices and are reluctant sellers in the current market. While
LIFFE futures are near season lows, the higher premiums have been an
offset, thus providing support to ex-farm prices. Most trade opinions
suggest LIFFE futures will remain in a tight trading range for the time
being, with strong export competition from the Black Sea limiting upside
potential and lack of farmer selling providing the support.
European Harvest
Earlier concerns about German quality seem to have subsided. While
German E premiums for highest protein are holding onto earlier gains,
there does not appear to be a further “push” coming at this
time. German A priced itself into the U.K. in large quantities this
past season, but with U.K. breadmaking quality much improved this season,
German A is, as yet, non-competitive. French milling wheat quality still
looks to be good.
North American
DNS harvest is 90% complete in the U.S. Quality looks to be good, barring
the ongoing effort to assess vomitoxin levels. It will take several
weeks yet for warehouses to make segregations around various wheat vomitoxin
levels. It is apparent that there will be huge premiums charged for
DNS with the lowest levels of vomitoxin.
Canadian harvest is underway and expectations are for a crop with protein
in the mid-13’s range and more availability of both 1CWRS and 2CWRS
than seen in last year’s harvest.
U.S. futures have been led by weakness in maize and soy futures to
this point. Funds hold near-record short positions in Chicago wheat
and, should market fundamentals turn friendly, there is potential for
a spike upwards.
U.S. exports thru the center gulf (New Orleans port) are slowly getting
back into operation following hurricane Katrina. Some 25% of U.S. wheat
exports are shipped via this region.
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