Pace of US wheat exports 'well behind average'
Jonathan Lane, Gleadell’s trading manager, comments on grain markets.
Wheat
The US market has eased back over the past week (MAY CBOT falling 27c/bushel $10), despite the recent sale to Egypt. The pace of US wheat exports are well behind the average and this year’s current USDA projection, prompting thoughts of a reduction in the export numbers in next week’s USDA report.
EU markets followed the US lower, with MATIF MAY down €6. The recent purchase by Egypt also included a 60tmt sale of French wheat, along with a 60tmt sale from Romania. With the Ukraine all but finished on wheat exports for the season, and the likelihood that Russian offers will soon dry up due to higher domestic prices, EU wheat remains supported on expected North African export demand.
The UK market continues to defy gravity, with the market unchanged on the week. The overall tightness of the UK balance sheet was further confirmed last week with the news that the Vivergo plant is now open and expected to reach full capacity early in the new year. The adverse weather continues to hinder planting progress, with the HGCA now reporting that about 80% of winter crops have so far been planted.
In summary, the USDA report next week should report a further global tightening of corn/wheat stocks. Market fundamentals remain intact and bullish, however, the market is always vulnerable to bouts of profit taking and any macro-economic data that affects potential demand.
Oilseeds
The early part of the week has seen MATIF rapeseed futures come under pressure in light volume trade. Australian harvest pressures appear to be the main driver for this as the MATIF rapeseed markets have underperformed other components of the oilseed complex.
Canadian canola has rallied towards the back end of the week, with Statscan increasing the Canadian canola figure to 13.3 million tonnes. This was less than market expectations. Production is down from 14.6mt a year ago, stretching the already tight supply and demand.
The soybean market continues to push higher, primarily on technical trading as opposed to any change in fundamentals. The south American weather seems to be mentioned on a daily basis, but it is fair to say there isn’t any big story developing there at present.
Domestically, the market remains quiet with little coming forward from farm and light inter-merchant trade, and we expect some choppy, light volume trade as we head into the Christmas period.
