US winter wheat 'worst start since 2002'
David Sheppard, Gleadell's Managing Director, comments on the wheat market.
Wheat
- Latest USDA report puts global corn and wheat stocks above trade estimates at 125.29mln t and 182.26mln t respectively
- India’s April 1 wheat stocks stand at 24.2mln t - above Government targets despite export drive
- Ukrainian 2012/13 grain exports forecast at 19.7mln t, up 25% on 2011/12. Potential to rise to 24mln t by the end of June
- USDA declares 36% of the US winter wheat crop is in good/excellent condition – the worse starting rating since 2002
- UkrArgoConsult cuts Ukraine’s 2013 grain crop forecast to 52.4mln t due to delays in spring plantings caused by snowfall
- Russia’s winter grain crop condition has deteriorated and IKAR has cut its grain crop forecast to 89-90mln t from 90-92mln t
- Agritel estimates the French 2013 wheat crop falling to 34.8mln t because of the impact of delayed growth (4% below 5-year average)
- Economic crisis will deplete Egypt’s wheat stocks to around 1mln t - imports will be needed despite its domestic crop.
USDA this week reported global stocks higher than trade estimates. However, US stocks were described as supportive, based on corn stocks being lower than expected and SRW stocks falling due to a pick-up in export demand.
The condition of the US winter wheat crop gained a few percentage points, but this is still the worst start since 2002. Storms are expected to bring in moisture but drought still prevails across much of the mid-west.
EU markets continue to firm, with a technical squeeze applying to the May MATIF - a lack of supply and high demand means short sellers are looking to cover their positions, which is pushing prices higher.
EU exports continue their brisk pace. USDA has again raising its projection for this trade to over 20mln t, leaving all-wheat stocks at just over 10mln t. The current weather pattern is raising concerns over late development of the crop and the potential impact upon yields, as snow cover starts to recede under cold conditions.
The UK is expected to see the first signs of spring next week as temperatures start to warm up. However, like much of Northern Europe, crops are well behind normal for this time of year – the UK still looks very brown. Hopefully, warmer weather will encourage plant growth but, as times progress, yield potential on what crop is growing will come under increased scrutiny.
Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market
- The May 13 MATIF rapeseed contract has moved in a narrow range this week with only light volumes being traded, leaving UK domestic prices around £385/t ex-farm for May. The broker market has been fairly quiet with little coming forward from farm.
- Poor margins mean limited crush demand and some European crushers will remain idle until the end of the season, with others selling back seed purchases. Merchants covering short sales are currently the best bids in the domestic market, paying more than crushers.
- The new crop market remains quiet here and in Europe, with farmers reluctant to sell. Although the UK crop prospects look poor and France has had some weather damage, on the whole the European picture is one of a large crop, with an improving weather situation in Germany and no major problems yet reported in Poland or the Ukraine.
- The USDA report on Wednesday raised global soybean ending stocks and reduced Chinese imports. The harvest continues in South America and, with no major weather problems, the focus will begin to shift towards US plantings.
