GRAIN MARKETS - Jonathan Lane, Trading Manager
WHEAT
The Ukrainian government denies curbing wheat exports and sees a good total grain harvest in 2012/13.
Russian grain exports may reach 25mln/t in 2011/12. Exports to date are put at 19.8mln/t.
Pakistan may match record wheat export volume as it heads for third successive bumper wheat crop.
Western Europe’s main wheat crop should emerge largely unscathed from severe winter weather.
USDA Outlook Conference has restated a large corn acreage of 94 mln acres.
Indian 2011/12 wheat output has exceeded the government forecast of 88.3mln/t – leading to a potential increase in exports. Indian wheat stocks are now three times the government-set target of 8.4 mln/t.
Egypt’s GASC purchases a further 180,000t of US wheat for 11-20 April shipment – no Russian wheat offered.
Saudi Arabia purchases 330,000 tonnes wheat (US/Canada/Australia/EU) – May/June shipment.
Kazakhstan forecasts a potential halving in this year’s grain harvest to 16-15mln/t from the post-Soviet record last year of 27mln/t.
Parts of England are reported as suffering from ’crippling drought’ with river and groundwater levels lower than in 1976 – the hottest year on record. The word ’drought’ normally induces a soaking month or two when used in the UK.
In summary
Good demand from North Africa/Middle East has continued over the past week, with Egypt buying further volumes of US wheat. Black Sea offers have slowed, although remaining Russian grain exports are estimated at 4mln/t, and confusion reigns over the situation in Ukraine.
The USDA Outlook Conference this week projected a large US corn acreage, production (given current trend yields) and stock figures. With Brazil forecasting a record 60mln/t corn crop in 2012, this may ease the pressure on supplies - and therefore price - for the balance of this and next season.
EU wheat, supported by a ’slow-down’ in Black Sea exports, remains tight with French and UK balance sheets finely balanced. There are still a few weather concerns around but, if the bearish global corn outlook is justified, wheat may lose one of its major price drivers.
Without a bullish corn story, even with the likelihood of lower wheat production in the FSU, wheat stocks would still remain plentiful and pressure prices.
OILSEED MARKETS - Willie Wright, Oilseed Trader
Crude oil is continuing to hold recent gains that have come from political fears surrounding Iran and increased confidence in the economic recovery. Crude is now at an all-time high when converted into Sterling which may become an inflationary issue.
Soybeans have broken through their technical resistance and could possibly move higher. Weather issues in South America have settled, although the potential production losses may underpin the market in the short term. Soybean sales to China continue to remain healthy.
Old crop rapeseed continues to hold its recent gains and, with Sterling swinging around against the Euro, farmers are achieving £370 ex farm in a number of locations. New crop rapeseed has reached £350 ex farm that has rightly brought some good farm selling.
The recent weather issues in Ukraine and surrounding Black Sea countries have dissipated with the market place unsure of what, if any, winterkill damage has taken place. It would appear the dry weather problems pre-Christmas had a greater impact on rapeseed development than the recent cold weather.
Greece has agreed to a new round of austerity measures that has given the general market place some comfort in the short term.