Wheat
- Weather has moved centre-stage this week following winter storms in the US and a severe drop in temperatures seen there and across much of Northern Europe and the Black Sea region.
- Most of these areas had sufficient protective snow cover so damage is believed to be minimal here, but it could be different where snow cover was low or non-existent.
- US wheat rose about $3/t and then fell again as the trade tried to assess crop conditions.
- Further uncertainly has emanated from Russia. The wheat export tax is now in operation and due to increase in March before the floating tax system is being adopted in June, making forward pricing of Russian export wheat almost impossible, especially for new crop.
- Russia is usually the world’s biggest wheat exporter over the July-September period. Unless the situation becomes more transparent, key importers may be forced to look elsewhere for supplies, underpinning new crop values.
- Russia’s February exports of wheat, barley and maize will only fall slightly on the month to 3.1mln t, as a surge in wheat exports prior to the introduction of the wheat export tax will boost the monthly total.
- In its monthly update, Strategie Grains increased the forecast for current season wheat exports from the EU and UK to 26.1mln t, reflecting a shift in demand away from Russia.
- Soft wheat exports from the EU had reached 16.25mln t as of 14 Feb, down from 19.53mln t cleared by the same week last year.
- Ukraine grain exports have reached 29.8mln t so far this season, down 20% on the year, with traders reported to have sold 13.16mln t of wheat, 12.21mln t of maize and 3.96mln t of barley.
- In the UK, official data continues to show a slowing in domestic demand across all sectors – industrial, food and feed – due to lockdown restrictions. Although the UK is reported to have imported 1.42mln t of wheat to the end of December, a further 1mln t is expected to be needed during the second half of the marketing season to make up for harvest 2020’s dramatic shortfall.
- This means the UK will have to remain at import parity. EU values are likely to remain supportive due to Russia’s export tax. That said, actual import requirements will depend on how current Covid restrictions prevail.
- Looking ahead, Strategie Grains cut its forecast of the 2021 EU soft wheat crop to 129.6mln t, down fractionally from the 129.7mln t forecast last month.
- Analyst IKAR said earlier in the week it had raised its estimate for Russia’s 2021 wheat crop by 1mln t to 78mln t, due to an improvement in weather conditions.
- Australian farmers will harvest a record wheat crop in 2020/21, after heavy rains in key producing regions boosted yields, according to ABARES who now estimate the crop at 33.3mln t.