US corn planting acres 'highest level since 1936'
David Sheppard, Gleadell’s Managing Director, comments on the wheat market.
WHEAT
- USDA reports corn planting at 97.379mln acres, defying forecasts. This is the highest planted level since 1936.
- Crop-friendly weather continues to dominate the US mid-west corn- and soybean-growing regions.
- Egypt purchases 180,000t of Romanian / Ukrainian wheat for shipment 10th-20th August – well below French / US offers.
- Russian wheat prices fall as harvest gathers pace and higher yields are reported.
- US drought expands for third straight week in the southern plains - may impact upon early 2013/14 US winter wheat plantings.
- China purchases another 3 cargoes of US corn bringing total purchases of new-crop US corn to 2.8mln t.
- China purchases 300,00t of Australian wheat following reports of damage to domestic crops.
Although the US stocks report was bullish, the acreage report was bearish and this set the tone for a lower market. Corn acreage, the highest for 77 years, was about 2mln acres above trade estimates and, with favourable weather entrenched across the mid-west, yield potential remains positive.
Egypt’s first international purchase since February raised comments on ‘how much political risk premium’ has been built into the prices, given the vast difference in the range of offers. China continues to purchase new crop corn and wheat at prices well below domestic levels, leaving many believing that USDA is underestimating Chinese import needs, especially given growing reports of domestic crop problems.
EU harvests have commenced in the west with reports of good barley yields from France and Spain. Earlier-than-expected wheat harvests in the Black Sea region also continue to report higher yields than 2012.
UK markets are about £5/t and £2/t down respectively for old and new crop and farmers remain reluctant sellers. Domestic demand is sluggish as most end-users expect lower prices and are staying clear of the market. New crop values have slipped to levels seen more than a year ago and, given the current global bearish sentiment, could move lower, especially if corn values continue to ease on improving new-crop prospects.
Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market
- The latest USDA figures suggest the US soybean crop is 96% planted with 67% rated as good/excellent and the forecasts point to good short-term weather.
- Apart from the UK, the European crop looks in excellent condition. Farmers have a low percentage of forward sales on the books so there could be a wave of selling at harvest, which could put further pressure on prices.
- Crush margins in Europe are profitable for the harvest period but are poor thereafter. The meal market remains fairly firm but the rapeseed oil sector has been coming under pressure due to question marks over demand and a large European crop looming.
- Both the UK delivered and export market have been very quiet. Merchants are reluctant to put on sales with little coming off farm.
