Gleadell Grains & Oilseeds Market Report - 19th August 2011
GRAIN MARKETS - David Sheppard, managing director
WHEAT
Trading the fundamentals on most commodities remains tricky, as ongoing concerns over global economic prospects, worries in the euro zone and general uncertainty has traders second-guessing the next market move.
Fundamentally, the USDA report last week confirmed a tight US and global corn scenario, but with what appears are ample supplies of wheat, albeit with demand set to reach new record levels. As the harvest slowly moves into full swing across mainland Europe, crop estimates are revised on an almost daily basis. The latest German wheat crop is now projected at 22mln/t, as late rain has damaged crops already weakened by a spring drought. France’s farm agency recently raised its wheat crop to 33.3mln/t; also stressing the crop had reasonable quality for flour making. Crops in the Black sea region have seen a marked recovery from last year, and this week both the Ukraine and Kazakhstan has raised their 2011 grain crop forecast, to 46.26mlnt and 18.9mln/t respectively.
US crop ratings, following the recent fall over the past few weeks, have stabilised following the adverse conditions experienced that led the USDA to reduce the projected yields of the corn crop last week. US farmers reported 7 million acres where plantings of soybean and spring wheat had been prevented due to poor weather.
In summary, the markets have digested the USDA data and now the bulls will need further feeding before moving. Fundamentals still remain outweighed by macro economic factors, and therefore, markets will remain volatile. Egypt are in the market today for October wheat, and have bought Russian and Romanian wheat at a discount to other origins.
OILSEED MARKETS - Jonathan Lane, trading manager
After the wild price movement of previous weeks the rapeseed market has been comparatively quiet. Prices on the Matif have been trading in a relatively narrow range and the biggest influence on UK farm gate prices has been the swings in the currency.
The bulk of the UK’s rapeseed harvest is in the barn and it would be fair to say that most growers have been delighted with their yields. From the anecdotal evidence we have heard thus far it would be safe to assume that the UK has harvested the biggest crop ever. Fortunately for British farmers, the EU-27 remains short of rapeseed overall and the crushers in Germany and Holland are likely to remain keen buyers of UK sustainable rapeseed and we continue to see good enquires on an almost daily basis for the pre-Christmas positions.
The crush margins have improved and EU seed looks comparatively cheap versus other global origins given the volume that the EU needs to import. But, the overall flat price direction of this market remains a difficult one to call. We will continue to track moves in soy and, critically, crude oil and, whilst the S&D should ultimately point to higher prices, the Macro’s and influences of outside markets will make for extreme volatility for the foreseeable future.
