Wheat market update
Russia’s Prime Minister signs an order banning exports of wheat, barley and maize from 15th August to December 31st.
The order also proposes that the Government requests the executive commission of the Customs union of Russia, Belarus and Kazakhstan to apply the ban to exports of all three countries.
• Russia to review the export ban in December, but have not ruled out potential extension into the new year after more crop information is known.
• Analysts estimate the wheat crop at 43-44mmt, down from 61.7mmt last year.
• Ukraine seeks to curb grain exports in 2010/11 – Final decision to be made next week.
• French farm ministry sees 2010 soft wheat production at 35.16mmt, down 3.3% on last year.
• Strategie Grains cuts its estimate for this year’s EU soft wheat crop to 128.2mmt, 1.3mmt less than forecast last month.
• Egypt’s GASC switches to French wheat, purchasing 360,000t during the past week - a replacement for Russia.
• Indian wheat stocks a/o August 1st were at 32mmt, above the target of 17.1mmt – Government looking at potential exports.
• USDA cuts Global wheat production by 15.3mmt, mostly on reductions for FSU-12 and EU-27 countries. Production for Russia is lowered 8mmt, with Kazakhstan down 2.5mmt and the Ukraine down 3mmt due to extreme drought and record heat. Even with lower demand, due to the higher prices, ending stocks are projected much lower at 174.8mmt, down from 187.1mmt last month.
• DEFRA , in their June census, has reduced the English wheat area by 71,000 hectares – a fall of over 500,000 mt of end crop. In the current scenario of wild price fluctuation, this may seem like a drop in the ocean - but it certainly tightens up the UK balance sheet to leave the UK exportable surplus at under 1.5 mln mt.
Over the past week, the ’buy the rumour, sell the fact’ scenario was evident as, after the initial surge higher on the Russian export ban, profit taking entered the market bringing prices back lower. There is much uncertainty over if and when the Russian ban may be overturned but, with Russia pushing its neighbours to follow suit, market volatility will continue in the short-term.
