Wheat
- In a roller-coaster week markets have managed to recover some of the losses following the sell-off into last weekend, but are still trading down overall.
- Wheat market fundamentals remain unchanged. Russia’s government has approved the higher €50/t export tax on wheat from 1 March in a further attempt to curb rising domestic prices, which is envisaged as constricting the availability of export wheat onto the global markets..
- The country’s government has also approved an export tax on corn and barley of €25/t and €10/t respectively, starting 15 March running through until 30 June.
- Although markets remain very nervous after the recent sell off, it remains hard to find a reason why cash values should decline from current levels. There is limited volume available from the Ukraine and Australian elevators are booked solid for the next few month, and EU exports need to slow and UK imports need to rise.
- Soft wheat exports from the EU had reached 14.5mln t as of 24 January, down from 17.1mln t cleared by the same week last season. However, the tonnage remains too high in context to the EU balance sheet.
- The need to slow exports remains a tough proposition, as demand is expected to continue from North Africa and the Middle East countries when Russia is trying to price itself out of the market.
- But, unless that demand switches to other origins such as Argentina, Australia, or the US, the EU market could move higher to try to choke overseas trade.
- Australian wheat prices offered to Asian destinations have climbed to a seasonal high on expectations of lower supplies from the Black Sea region.
- Further bullish news continues to emerge elsewhere. Condition ratings for US winter wheat declined during January in many key producing HRW states (Kansas, Colorado, Nebraska and South Dakota), although they improved in Montana and several SRW producing states.
- Despite warnings that authorities might block wheat from Australia amid escalating tensions, exports to China surged last month to 600,000t, with a further 110,000t being shipped in January.
- Return of rain in Brazil is disrupting the soybean harvest and slowing down fieldwork, potentially delaying sowing of the country’s second corn crop.
- Rains in Argentina have improved prospects for recently sown crops, but worries about potential crop yields persisted ahead of February, usually one of the driest months of the year.
- Grain crops in the EU have mostly acquired greater frost resistance during the cold spell since December, but an unusually mild winter in the south east of the bloc has limited plant sturdiness.