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23 November 2012 09:04:37 |

Strategie Grains lowers European wheat estimates

Jonathan Lane, Gleadell’s trading manager, comments on markets...
Markets are virtually unchanged from last week - fundamental long-term support is still intact due to further potential crop reductions in the Southern hemisphere and declining new crop US wheat ratings. US winter wheat crop ratings fell another 2 points to 34% good/excellent, mainly as a result of the dry weather that has affected much of the Midwest, and compared with a rating of 50% this time last year.
European markets again drew support from a further decline in the wheat crop forecast, as Strategie Grains lowered their estimate to 122.7mln t, down from 123mln t last month. The lower crop will again leave traders projecting a bullish export outlook with limited competition from weather-affected rivals.
In the UK, it appears that the Vivergo plant in Hull is ‘up and running’ with purchases of wheat for next week delivery being made. Initially, they are buying wheat down to min 68kg/hl. Although many had included this facility in their supply & demand estimates for this season, the reality of the commissioning dims another ray of hope to the UK market ‘bears’.
The early part of the week has seen soybeans find some support, with market volatility easing and a small range developing. Volumes have been light with traders reducing risk ahead of the US Thanksgiving holiday on Thursday where US markets are closed. The soybean fundamental outlook remains one of tight supplies and strong demand, but we have a large South American crop looming for early next year and there are reports that better weather is aiding these plantings.
Domestically, the UK market remains quiet with ex farm rapeseed worth around £365/tonne. There is a similar story in continental Europe with little coming forward from farm as the market remains below target selling levels for farmers. In Germany, which along with France are the EU’s biggest producers, favourable weather has led to an estimated 100,000 Ha increase in plantings.
Over the past week global markets have been influenced by macro-economic factors including the Israeli–Palestine conflict, the seemingly never ending Greek debt saga and uncertainty regarding the US budget and tax policies known as the ‘fiscal cliff’. All these factors have added a cautious tone to global markets.


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