Feed wheat report
"The USDA reduced 2010 global wheat crop by 7.5mln/t, as smaller crops in the FSU, EU and Canada, more than offset higher production for China and the US. Ending stocks were reduced by almost 7mln/t to 187mln/t," says David Sheppard, managing director, Gleadell Agriculture.
"Kazakhstan expect lower 2010 grain crop (14.5-15.5mln/t), down from 20.8mln/t last season. Exports are also likely to fall from 8.3mln/t in 2009/10 to 6.5mln/t in 2010/11.
"SovEcon cut their forecast for Russia’s 2010 grain crop to 77-81mln/t, down from 82-86mln/t previously, as a severe drought persists in some key producing regions. Within the report, the wheat forecast was reduced to 49-51mln/t, down sharply from the 61.7mln/t harvested in 2009.
"French farm office, AgriMer, estimated France’s 2010 soft wheat crop at 35.3mln/t, down from 36.5mln/t in 2009.
"German farm cooperative, DRV, cut its forecast for Germany’s 2010 grain crop to 44.2mln/t, down from 49.7mln/t harvested in 2009 and sharply lower than the 47mln/t in its June forecast.
"Strategie Grains cuts its EU-27 soft wheat production estimate to 129.5mln/t, down from 133.1mln/t in June. Total cereal production was estimated at 281mln/t, down from 287.8mln/t in June and 292.8mln/t produced last season.
"The USDA reports last Friday saw the market take a breather as increased production and stocks within the US allowed the Chicago to fall lower, causing EU markets to stall from the recent rally. However, since the report, markets have again ’gone to the races’, as increasing reports of production cuts in key EU and FSU producing regions has added to the current bullish sentiment to the market.
"Weather will remain the key over the next few weeks, with analysts and traders waiting for harvest to commence allowing better assessment of the wheat crop in terms of yield and, more importantly, quality. Until the combines start turning, there seems enough buying interest to support the current rally, with end-users looking to cover spot requirements.
"However, if crops turn out as expected, or with even another possible 5-10mln/t of wheat coming off the global production, wheat stocks still remain well above panic levels. Higher prices for wheat could see the projected increase in use falter meaning stocks could remain close to the 187mln/t currently being predicted, leaving the long-term sentiment still bearish" Mr Sheppard adds.
