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20/01/2012 10:28:15
Market Report - 20/01/2012
GRAIN MARKETS - Jonathan Lane, Trading Manager
WHEAT
The Canadian wheat board sees smaller 2012/13 global wheat crop at 677mln/t, and the outlook remains bearish.
The AAFC sees Canadian 2012/13 all-wheat production at 26.5mln/t, with ending stocks projected at 7mln/t.
Black Sea (Russia/Ukraine/Kazahk) July-December grain exports placed at 30.7mln/t, and could export another 28.5mln/t January-June 2012.
Strategie Grains raised its estimate for EU 2011/12 grain output to 285mln/t, and projects 2012/13 grain output up 1.7% to 289.8mln/t.
About a third of Ukraine’s winter grain crops remain in poor condition as of mid-January due to severe drought.
Egypt’s GASC purchased 180k/mt for March 21-31 shipment, including another 120k/mt French wheat.
Argentine grain exchange report corn plantings are slowing due to dry weather that has already damaged crop.
The French farm ministry lowered wheat ending stocks to 2.3mln/t, based on higher Non-EU exports projection.
UK wheat exports for November reach a season’s high of 442,797 tonnes, bringing the season-to-date total to 1.25mln/t.
Summary
Markets remained finely balanced, with US markets eyeing weather in South America, and EU markets looking at increased export potential. The USDA report last week set the tone, as rainfall set funds into sell mode following the bearish numbers. However, local reports still show production estimates well below current USDA projections regarding Argentine corn production.
In the EU, the weaker € and firming Black Sea prices have allowed French wheat to feature in recent Egyptian tenders, leading to a reduction in closing French stocks. UK exports also showed a marked increase in November as low water in the Rhine and Danube prevented river shipments from central Europe, forcing EU feed producers to turn to supplies shipped by sea.
Fundamentals of the market still point to abundant supplies of wheat and other feed-grains. Markets will continue to focus on South American weather and future USDA cuts in Argentine/Brazilian corn production estimates cannot be ruled out. The new crop grain outlook remains promising except for the Ukraine where, if grain is re-seeded in the spring – most probably with maize, this will be higher yielding than wheat, increasing the feed-grain stockpile.
OILSEED MARKETS - Willie Wright, Oilseed Trader
Soybeans have bounced 40 cents from their post-USDA low, which would indicate the market is not yet convinced that the rain in South America, or more importantly Argentina, is sufficient for corn and soybeans at this time.
Rapeseed has slipped over the last week as a result of profit taking after a €40 run up in old crop or €30 in new crop. Recent farmer sales have taken care of domestic market demand, pushing first hand buyers out of the market for the time being. The export market remains strong with varying opinions on exported tonnages so far, although some traders are forecasting the UK exportable surplus being shipped by February.
The Matif futures rapeseed market remains largely inverted and we now see this pattern appearing in the new crop market place.
Crush margins for rapeseed remain very poor in the near term.
Towards the end of last week we saw Standards & Poor’s downgrade seven Eurozone countries, negotiations in Greece faltering and the IMF looking to bolster their funds by $500 billion which should have spooked the markets. Remarkably it didn’t, and crude oil, equities and the wider macro-economic market place are trading with a surprising amount of optimism. We can only assume that the ratings agency’s opinions of the markets are less important compared to the success or failure of weekly bond/bund auctions.
WHEAT
The Canadian wheat board sees smaller 2012/13 global wheat crop at 677mln/t, and the outlook remains bearish.
The AAFC sees Canadian 2012/13 all-wheat production at 26.5mln/t, with ending stocks projected at 7mln/t.
Black Sea (Russia/Ukraine/Kazahk) July-December grain exports placed at 30.7mln/t, and could export another 28.5mln/t January-June 2012.
Strategie Grains raised its estimate for EU 2011/12 grain output to 285mln/t, and projects 2012/13 grain output up 1.7% to 289.8mln/t.
About a third of Ukraine’s winter grain crops remain in poor condition as of mid-January due to severe drought.
Egypt’s GASC purchased 180k/mt for March 21-31 shipment, including another 120k/mt French wheat.
Argentine grain exchange report corn plantings are slowing due to dry weather that has already damaged crop.
The French farm ministry lowered wheat ending stocks to 2.3mln/t, based on higher Non-EU exports projection.
UK wheat exports for November reach a season’s high of 442,797 tonnes, bringing the season-to-date total to 1.25mln/t.
Summary
Markets remained finely balanced, with US markets eyeing weather in South America, and EU markets looking at increased export potential. The USDA report last week set the tone, as rainfall set funds into sell mode following the bearish numbers. However, local reports still show production estimates well below current USDA projections regarding Argentine corn production.
In the EU, the weaker € and firming Black Sea prices have allowed French wheat to feature in recent Egyptian tenders, leading to a reduction in closing French stocks. UK exports also showed a marked increase in November as low water in the Rhine and Danube prevented river shipments from central Europe, forcing EU feed producers to turn to supplies shipped by sea.
Fundamentals of the market still point to abundant supplies of wheat and other feed-grains. Markets will continue to focus on South American weather and future USDA cuts in Argentine/Brazilian corn production estimates cannot be ruled out. The new crop grain outlook remains promising except for the Ukraine where, if grain is re-seeded in the spring – most probably with maize, this will be higher yielding than wheat, increasing the feed-grain stockpile.
OILSEED MARKETS - Willie Wright, Oilseed Trader
Soybeans have bounced 40 cents from their post-USDA low, which would indicate the market is not yet convinced that the rain in South America, or more importantly Argentina, is sufficient for corn and soybeans at this time.
Rapeseed has slipped over the last week as a result of profit taking after a €40 run up in old crop or €30 in new crop. Recent farmer sales have taken care of domestic market demand, pushing first hand buyers out of the market for the time being. The export market remains strong with varying opinions on exported tonnages so far, although some traders are forecasting the UK exportable surplus being shipped by February.
The Matif futures rapeseed market remains largely inverted and we now see this pattern appearing in the new crop market place.
Crush margins for rapeseed remain very poor in the near term.
Towards the end of last week we saw Standards & Poor’s downgrade seven Eurozone countries, negotiations in Greece faltering and the IMF looking to bolster their funds by $500 billion which should have spooked the markets. Remarkably it didn’t, and crude oil, equities and the wider macro-economic market place are trading with a surprising amount of optimism. We can only assume that the ratings agency’s opinions of the markets are less important compared to the success or failure of weekly bond/bund auctions.
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