Australia heatwave scorches wheat belt

Jonathan Lane, Gleadell’s trading manager, comments on grain markets:

Wheat

Kazakhstan sees potential grain exports of 7mln t in 2012/13 with 3.8mln t exported so far this season.

Ukraine’s winter grains reported at 91.5% in good/satisfactory condition – same date last year figure was only 68%.

Argentina to approve at least another 3mln t of maize exports. EU monitoring unit sees EU winter cereal crops avoiding damage for another week.

IGC cuts global maize stocks to a 9-year low – upward revision in global consumption.

Australian heatwave scorches wheat belt – supply fear concerns increase.

Russia may consider lifting grain import duty – Deputy PM reports no need to lift at present.

EU wheat exports to stay brisk despite US surge - EU wheat needed after weather hits other exporters.

The wheat market is lacking a sense of direction at present with a EU market not finding reasons to move higher, but reluctant to come down dramatically either.

US markets are focused on weather and the ongoing drought in parts of the wheat belt, with weather forecasts under close scrutiny.

The path of least resistance, with a lack of new bullish news to drive markets higher, is lower, but we can expect prices to recover ground rapidly on any new bullish information.

In the UK, consumers are getting well covered for February and March and, with German A wheat imports continuing to accelerate, there are more sellers than buyers of Feb-June UK Group 1 milling wheat, and premiums are well off the top as a result.

Oilseed Rape

This week has seen domestic activity pick up considerably, with ex farm prices of around £375-£380 tempting farmers back into the market. Domestic and European crushers have been keen to buy seed for February and March, while crush margins remain attractive for these positions. At the time of writing, the May 13 matif contract is up around 10 euros for the week.

The euro continues to rally against sterling supporting UK prices.

In South America, there remains the odd rumour of less than perfect weather in one or two areas but, on the whole, we currently have no weather problems of note and conditions remain good.

Crush and export demand for soybeans remain strong but we have this large South American crop looming on the horizon. There are also some question marks around logistics and infrastructure in certain areas. We feel the overall picture for the soy complex remains mixed.