Gleadell Market Report - 6 May 2011
Russia may lift its ban on grain exports earlier than 2012 if it revises its cereal supply estimate upwards. Russian grain stocks as of April 1st were reported at 26.2mln/t, down 20% from a year earlier.
USDA attaché report Kazakhstan’s 2011 wheat production will rebound to 14.5mln/t, assuming normal weather. Wheat exports are forecast at 7mln/t, an increase of 2mln/t on the 2010 estimate.
Ukrainian Agriculture Ministry has raised its 2011 grain forecast to ’up to 45mln/t’ from 42-43mln/t, and expects a jump in exports. The ministry sees 2011/12 exports at 19-20mln/t, including 8-9mln/t of wheat and 5-6mln/t of barley.
Rain and snow stalls western Canadian crop planting, with less than 2% planted, against a normal progress of 10%. Plantings remain about two weeks behind due to extensive flooding and melting of snow on already saturated ground.
Good weather conditions and high global prices are expected to increase Argentine wheat plantings by 10-15%.
A crop tour of key HRW winter wheat states (Kansas, Oklahoma and Texas) has commenced, with reports of variable yields across Kansas, with analysts projecting the smallest Kansas wheat crop in 9 years, and the smallest wheat crop for 40 years in Oklahoma. Traders await the final reports later this week, as these states are the main HRW growing areas.
Spanish grain stocks in ports and warehouses are declining as traders and consumers wait to see how the domestic wheat and barley harvest fares next month. Even in bumper years, Spanish harvests are never enough to meet domestic demand and the country needs to import at least 10mln/t of cereal a year.
USDA report corn plantings at 13% complete, up 4% on the week. Spring wheat plantings were 10% complete, also up 4%. Winter wheat crop conditions continue to decline, with now only 34% of the crop rated in good/excellent condition.
Weather remains the key factor, with adverse weather in the US either hampering corn plantings or continuing to distress the HRW wheat crops. Harvest in the southern US states is a matter of weeks away and many believe that the damage has already been done; any rain now will only stop further declines. China and Northern Europe remains dry, with reports that the German crop is now stressed due to the lack of rain, with potential yield losses.
In the UK, rain is expected in the next few days although the amount due to fall in the dry east and south is hard to determine. However, on the ’flip-side’ Societe Generale has followed Goldman Sachs in warning of tougher times for commodities prices, and the ’suggestion that the commodities bull run may run out of steam’. This has encouraged long holders to liquidate positions and bank profits, and sharply lower oil prices have not helped ag commodities.
