Brazil and Argentina estimate record 2013 crop

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

Wheat

The market has continued to firm this week, supported by declining old crop production prospects and major concerns over new crop plantings. News that the Ukraine has again placed an export ban on wheat is not unexpected as the raised ceiling of 5.5mln t wheat exports will be reached by end November.

New crop ratings in the US were reported at only 39% good/excellent, an all-time low, allowing Chicago to rally over the past week. Planting delays in most of the western EU has helped support higher market levels.

Today, the USDA released updated US and global production/stocks numbers, raising both global corn and wheat stocks, albeit only by 0.72mln t and 1.18mln t respectively. While this may provide a ‘breather’ to the markets, the long-term sentiment is still bullish, especially with lower corn harvested acreage and further cuts in wheat production expected.

The UK picture is still projecting a pick-up in imports and little to no demand for exports. Farmers are still struggling to get crops planted, meaning that the planting window - especially for wheat - may be extended longer than normal. How this affects the yield potential, and exactly how much gets planted, are questions that will bring much debate over the coming months.

Oilseeds

The range bound, light volume markets continued, with the early part of the week dominated by US elections, and the latter part by the USDA monthly report. Financial and energy markets dipped when the election result came in - but the agricultural markets remained steady, with the USDA being of more interest than the ‘spend and tax’ policies of the US president.

The USDA report was slightly more bearish for soybeans than trade estimates, with US production revised upwards by 111 bushels (3mmt). In the near term the oilseed sector looks most vulnerable to weaker prices, but a key focus will be centred on the progress of the south American soya crop.

South American plantings are continuing in the main producers Brazil and Argentina, and current estimates point towards a record crop for 2013, all of which will be required. However, soybean export sales remain strong, and demand is unrelenting - illustrated by China buying a record amount for the month of September.

Domestically, and on the continent, the rapeseed market remains slow with little coming forward from farm and crushers currently absent from the market.