US fiscal concerns slow US exports
Jonathan Lane, Gleadell’s trading manager, comments on grain markets:
Wheat
As we move into 2013, the market has remained in its bearish sentiment over the festive period. US fiscal concerns slow US exports, and the likelihood of huge South American crops coming to the rescue of dwindling US stocks has encouraged fund long-holders to bank profits and re-position their buyer strategies.
European markets, in general, have followed the US lower, with adjustments being made for the US$ movement. Buying interest remains intact, although Egypt’s main buyers indicated that, due to better domestic procurement, the requirements for imported wheat would be 1mln t less. French carry-over stocks have been increased by about 250,000t, mainly due to lower domestic use and intra-EU trade.
With the UK only just up and running on full steam, the recent price drop has encouraged little farmer selling at the lower numbers. Farmers are slowly digesting the lower values and determining how much of what quality they have to sell. Buying demand remains on a monthly basis with end-users constantly reviewing buying policies.
The USDA are due to release a rack of reports today - US and Global supply and demand estimates, US quarterly stocks, final US corn and soybean production numbers and US winter wheat plantings. With US production and US/Global supply and demand expected to throw up few surprises, the likelihood of increased US winter plantings (up to 3% higher) will keep wheat prices on the defensive, especially with the sharp rebound in global production projected for 2013/14.
Oilseed Rape
The Matif rapeseed has rallied around 10 euros this week and is now up around 20 euros from the December lows. We haven’t had any big bullish story for the move up, but rapeseed is currently cheap in comparison to Canadian canola and European crushers, and trading houses have been buying the February Matif rapeseed contract to take delivery of physical seed.
Ex farm UK seed is currently worth around £360 per/tonne for February.
Rapeseed crops in German and Poland are currently in very good condition. There remains a slight question mark over some areas of France but, at present, nothing too concerning.
Canadian canola and soybeans are relatively unchanged on the week and trade remains quiet ahead of Fridays USDA report. The USDA is expected to increase the soybean yield with a wide range of analyst predictions for the new yield figure.
The Brazilian soybean new crop figure was also raised yesterday by CONAB, and the USDA are expected to follow and raise their number. South American weather continues to be good.
Soybean demand remains strong with crush and export figures remaining healthy.
