Gleadell Market Report - 29/11/2011
GRAIN MARKETS - David Sheppard, managing director
WHEAT
Ag Canada sees 2011/12 all-wheat production at 24.16mln/t, up from 23.17mln/t in 2010/11. Egypt’s GASC continues to purchase Black Sea wheat ’ purchases to date now at just under 4mln/t. EU may extend zero import duty on feed wheat and barley until June 2012 ’ currently in place until
31 December 2011.
Australian harvest accelerates in the East, although some rain delays being experienced in NSW. Quality issues may arise if this continues.
Ukraine plan to sow an additional 2mln ha of spring grains to compensate winter crops affected by poor weather.
EU wheat continues to fall on gloomy economic outlook and export competition.
Analysts see corn prices returning to over $7/bushel due to ’tightness in supplies’.
Ukraine winter crops continue to suffer, affected by dry weather/poor conditions during sowing period.
Summary
Markets continue their trend to drift lower as global economic concerns and euro-debt worries weigh on prices. Lack of exports from the US/EU due to increased competition from the Black Sea is increasing the likelihood of stocks increasing. Domestic demand continues to slow with mild weather reducing requirements for animal feed.
The lack of fresh fundamental support, over and above the current global worries, is seen as negative to prices. Corn and wheat prices continue to drift trying to encourage buying interest, but all this is achieving is lowering the prices within the Black Sea, keeping the status quo the same. Could be down even from these levels.
OILSEED MARKETS - Jonathan Lane, trading manager
Soybeans remain very much in a downward trend with large specs and index funds reducing long positions to near zero with some starting to go short.
China has cancelled orders for up to 300,000 tonnes of refined palm oil over the past month as some traders had over-committed cargoes and domestic prices remain lower than that of imports.
Rapeseed prices have dropped over the last week with old crop prices falling around ’16 and new crop falling around ’10 per tonne. This price action is demonstrating a weaker old crop with the weight of cheaper Australian canola hanging over the 2011-12 market period, and a mildly friendlier tone in the 2012-13 period.
Macroeconomic events continue to spook the markets and weren’t helped this week by Germany’s undersubscribed debt auction. Oilseeds are not the only commodities trending downwards, with investor deleveraging continuing to drain money out of agricultural commodities it’s very hard to be price friendly at this time.
Fundamentals for rapeseed remain good with strong demand in Europe’s bio diesel sector through 2012-13.
Poorer planting figures throughout Europe with dry growing conditions are causing some concern for the rapeseed market going forward.
