Gleadell Grain Market Report - 13th May 2011
WHEAT
High global prices could spur Argentine farmers to plant more wheat when 2011/12 plantings start later this month, and output could increase by 20% to 18mln/t.
Kazakhstan’s Agriculture Ministry has cut its wheat export forecast for the current marketing year to 5.5mln/t, suggesting that the country will be in tight supply until the new crop.
SovEcon sees the area sown to wheat in Russia for the 2011 harvest at 25.9-26.4 million hectares, down from 26.5 million in 2010, which may raise the wheat crop to 48.5-50.8mln/t if there is no drought.
Ukraine will expand its grain sowing area by about 3% to 15.6 million hectares in 2011.
Chinese Agiculture Ministry reports that precipitation in China’s northern wheat producing area has eased the drought conditions and is very favourable for the crop’s growth.
Australian wheat exports are set to face stiffer competition as Pakistan, which resumed exports after three years, pours grain into the market and offers competitive prices to millers in Asia, the Middle East and Africa.
French farm office AgriMer raises its forecast for French Non-EU soft wheat exports in the 2010/11 season to a new record of 12.8mln/t. The upward revision in exports led the office to reduce its forecast for soft wheat stocks at the end of the season to 2.2mln/t, from 2.3mln/t a month ago, and would be 36% lower from 2009/10.
Strategie Grains cuts its forecast for the 2010 EU-27 soft wheat crop by 3.6mln/t, to 131.5mln/t, mainly due to the impact of drought in the western bloc countries. A prolonged dry spell has parched fields in the EU’s top three wheat producers, France, Germany and Britain fuelling expectations that wheat yields will be reduced.
We hear rumours that the Ensus bioethanol plant is to be mothballed for an undefined period of time. If true, this will boost the UK’s exportable surplus for 2011/12.
USDA, in its initial estimates for 2011, pegged US wheat production at 2.043 million bushels, down from 2.208 million in 2010. HRW wheat production was marked down at 762 million bu (1.018 billion bu in 2010) due to the current drought-like conditions. SRW wheat production was increased to 427 million bu (238 million bu in 2010).
For the 2011 global outlook, maize production was estimated at 868mln/t (815mln/t in 2010) with wheat production estimated at 670mln/t (648mln/t in 2010), although wheat stocks were projected to marginally decline year-on-year.
The USDA report released yesterday was deemed bearish, with higher than expected US corn stocks and 2011 global corn and wheat production seen covering the projected increase in demand. However, current weather issues relating to US corn and Canadian wheat plantings and EU, Chinese and US winter/spring wheat crop development still prevail, and these should provide support to the markets. One point to note, and to make EU markets nervous, is the prospect of Bulgarian/Romanian feed wheat - where crops look good - hitting EU importing countries at €25/30 below UK replacement.
