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Wheat Market Update - Thursday 10th September 2009
UK and Europe Harvest Overview
The UK harvest is now over 90% complete with only small patches in the Midlands and the Northern regions left to cut. Quality remains slightly above average, but variable moving up the country; though any issues with moisture and micotoxin fusarium levels appear unlikely. Farmers are now busy preparing land for imminent wheat plantings which are likely to start in the coming weeks.
Meanwhile, London feed wheat futures have drifted lower in the last week with true wheat fundamentals dictating market direction and a lack of fresh bullish news offering little opportunity for price support. Ample world stocks of old crop wheat, better than expected new crop production, a lack of consumer interest and export demand and improving weather conditions in the Southern Hemisphere have all weighed heavily on global wheat markets. However, producers are reluctant to sell at the current lower price levels which could in turn impact on spot values.
US/World Overview
U.S. wheat values are currently ignoring a weakening dollar and rallying crude oil prices and instead remain influenced by better corn and soyabean production figures and the latest USDA report, due out on Friday 10th Sept 09, which is expected to show an increase in U.S. wheat stocks. Wheat stocks could increase to as much as 800 million bushels, against the August figure of 743 million bushels. Meanwhile, the latest U.S. spring wheat harvest is lagging behind average but early samples show much higher yield potential compared to previous USDA crop report.
The search for bullish information sees traders turning their attention to the upcoming Southern Hemisphere harvest and any possible crop reduction forecasts could offer support to global wheat values. Recent rainfall in Australia has been welcomed whilst drought conditions in Argentina are reportedly improving. However, unfavourable weather in the coming weeks could still have an impact on final yields and production estimates.
Summary
All information appears bearish at present with any bullish market information hard to find or largely ignored. Fundamentals are now prevailing and markets look likely to consolidate at current levels. However, uncertain weather events between now and the Southern Hemisphere harvest, a lack of producer selling and a current oversold situation could still lead to a price rebound in the near future.
Wheat Market Update - Friday 4th September 2009
UK and Europe Harvest Overview
Unfavourable weather conditions continue to hamper harvest progress in Northern England and Scotland, which could potentially lead to deteriorating quality and yields. Meanwhile, the wheat harvest has been completed in the Midlands and South of the country and bread wheat samples continue to show slightly above average protein levels although this becomes more variable as one travels up the country. Farmers in the South and East are now busy planting oilseed rape and preparing land for wheat establishment which is likely to begin over the coming weeks.
London feed wheat futures appear to have lost the upwards momentum seen last week and are now trading lower. Markets are now back trading on fundamentals and with a bearish outlook in the short term there doesn’t appear to be much reason for upside price movement. Ample world carryout stocks, reasonable new crop yields, a lack of significant buying interest, weaker external markets and better than expected U.S. soyabean and corn crops are all weighing on markets at present. The only support for European and domestic markets has been the recent tender for 60,000t of French wheat from Egypt (2nd Sept 09) and the relatively weak Pound against the Euro.
US/World Overview
Attention is now starting to turn toward El Nino and its potential effect on wheat production in the approaching Southern Hemisphere wheat harvests which could offer the opportunity for a bullish sentiment to return to global markets. Both Argentina and Australia (two major wheat exporters) are experiencing dry spells at present which could soon start to have a negative impact on final yield outcome unless rainfall is realised. If dryness continues we could start to see some support creep into global markets as analysts begin to revise down Southern Hemisphere production estimates.
Summary
Wheat values appear to have settled down after the recent price spike seen on the London futures market last week and markets are now back trading on key fundamentals. The short term outlook remains bearish and values are likely to trade lower or consolidate at existing levels. However, the next couple of months could offer opportunities for price support and upside movement due to uncertain weather events and improving economic conditions and subsequent strengthening of external markets.
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