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Wheat Market Update - Monday 17th September 2007
UK & Europe
Following a wave of profit taking that enveloped the Futures markets
last week, both LIFFE and MATIF futures have started the week on a firmer
note.
Returning to fundamentals, traders have continued to express concern
following lower yields seen across European harvests this season, wheat
crops in Australia continue to be stressed by a lack of rainfall.
UK growers are reported to have sold up to 60% of this season’s
crop, and have remained reluctant to sell more since futures values
drifted from the peaks seen 2 weeks ago.
For many growers now, land work remains the priority in preparation
for increased plantings that will undoubtedly be seen this Autumn.
World Wheat
The USDA last week cut global wheat production by a further 5 million
tonnes down to 606mt, and increased usage to 619mt. Ending stocks were
also reduced to 112mt from 125mt last season. Surprisingly the USDA
only lowered Australian wheat production from 23mt to 21mt.
Most trade estimations are that production, which has suffered from
lack of significant rainfall,will eventually yield a crop somewhere
between 13-17mt.
The next 2 weeks are critical in determining the outcome, and with
little significant rainfall forecast, the situation remains critical.
Summary
The Bull market finally ran out of steam last week, as little fresh
news surfaced to fuel the situation. Ongoing export sales to major World
buyer like Egypt and India will keep the wheat market supported at current
levels.
The big question, and focus of World attention remains in the Southern
Hemisphere crops, particularly in Australia, where we await the announcement
tomorrow of the latest updated wheat forecast from the Australian government.
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