Grain Market report

GRAIN MARKETS - David Sheppard, managing director

Markets remained relatively steady this week ahead of the monthly USDA S&D report. The report remained mostly in line with trade expectations with wheat remaining neutral and corn bullish. Overall, wheat ending stocks were increased reflecting lower exports from Australia and lower feed usage in the EU.

Total US winter wheat plantings were above trade expectations at 40.99 million acres, this is an increase of 3.73 million acres from last season. The trade is keeping a close eye on the HRW progress as the current strong La Nina pattern can have a negative effect on this crop.

Harvest continues in the southern parts of Australia, with more rain this week further delaying an already delayed harvest. Quality is varied but yields remain good with bulk handlers taking in record amounts at most NSW and Victorian sites.

Wheat crops in western Europe look like they have managed to come out of the fierce December weather relatively undamaged. However, with warm temperatures seen this month and snow melting, any freezing weather from now on could be harmful.

India’s Farm Secretary has announced that they expect wheat production for this season to reach 82mln/t. This is 1.3mln/t higher than last year’s crop and, given the current high stock levels, could see India rejoin the market as an exporter.

In summary, wheat remains firm and due to the bullish world corn S&D and strong wheat export demand from the Middle East and Africa will continue to trade at current levels.