Gleadell Grains & Oilseed market report - 30/09/2011
GRAIN MARKETS - David Sheppard, managing director
WHEAT
The IGC raised 2011 global wheat production by 2mln/t to 679mln/t, citing upward revisions for Russia, the Ukraine and Australia. Wheat ending stocks were projected at 193mln/t unchanged from last month.
Egypt’s GASC purchased another 240,000mt of Russian wheat for Dec 11-20 shipment, again bypassing French and Australian offers. No US wheat was offered. Since the start of this season GASC has purchased almost 2.5mln/t of Black Sea/Romanian wheat. Ukrainian wheat was offered cheaper than the Russian trade but currently Ukraine is not on the approved GASC list of suppliers.
Russian September grain exports seen at a record 3.8mln/t following 3.3mln/t exported in August. Wheat exports are seen at 3.3mln/t in September, up from a previously record monthly figure of 2.7mln/t in August.
Ukrainian government raises its grain crop forecast to 52-53mln/t, due to a record maize harvest of about 20mln/t. Officials reported that the jump in the harvest would, in theory, allow the country to boost its grain exports to a record 24mln/t, but high export duties have prevented a rise in shipments.
Egyptian government has purchased 2.6mln/t of wheat from local producers in 2011 compared with 2.1mln/t a year earlier, which should reduce the volume of imports needed.
US corn supplies seen at an 8-year low, but down less than expected at 964mln bushels (average trade estimate) 44% lower than a year ago. The quarterly stocks report is due to be released by the USDA tomorrow at 12.30pm.
Markets remain gripped by financial/economic woes based around Euro land and the struggling global/US economies. Russian wheat is still the cheapest offer into Egypt, but the fact that Ukrainian wheat was offered cheaper, but not accepted, may point the way to the future, especially if current export duties are relaxed. New crop values should be supported due to the need for increased US corn acreage and dry weather in key wheat producing areas affecting crop plantings. However, fundamentals are not on the radar at present, as it is all about macroeconomics and, while this continues, commodity values remain at the mercy of the politicians.
OILSEED MARKETS - Jonathan Lane, trading manager
With rapeseed now trading £10 to £15 off harvest levels, sellers appear to be reticent to trade at current prices. Having sold a large quantity of rapeseed already there would appear to be little or no urgency to rush to the market. Rapeseed has held up well since the September USDA report trading in a £15 price range between £355 - £370 ex farm, depending on location.
We have seen large falls in Chicago Soybeans from a high of 1460 to a low of 1210 down 17% based on November 11. Crude Oil has also fallen 7-8% over the last 10 days. Soybeans, amongst a range of commodities, are accommodating a change of sentiment from external investors who have reduced their long holding substantially. Technically, soybeans and crude look over sold at this time and should benefit from a short-term bounce prior to the October USDA report.
Weather conditions have generally been good in the UK, and we would expect to see an increase in oilseed rape winter plantings, although there will be a decrease in the German rapeseed planting figures due to their very wet end to harvest. European rapeseed prices are still relatively strong and demand looks set to continue well into the New Year.
