Wheat
- Reports of favourable rains sweeping across South America, increased availability of exports from Russia and the confirmation of a massive Australian wheat crop were enough to produce long-liquidation in the Chicago grains and oilseed complex, pushing prices lower.
- However, the reduction in prices and the continued decline in the US dollar has made US products more competitively priced, and rumours of further Chinese buying enabled prices to bounce from the recent lows.
- While the EU and UK markets followed the US lower to a degree, the steady decoupling from the global market continues, as both regions focus on their own historically tight balance sheet.
- Overall, US wheat prices are down around $4/t on the week.
- Buenos Aires Grain Exchange placed the Argentine wheat harvest at 31% complete, with 39% and 32% of the respective soy and corn acreage sown. However, weather remains uncertain and crops are vulnerable to any excess dryness.
- Russia’s agriculture ministry reported that the country may increase the size of its grain export quota planned for Feb15-Jun30 to 17.5mln t from 15mln t presently.
- Research organisation ABARES revised its forecast for this season’s Australian wheat crop upwards by almost 10% from its September estimate, to 31.2mln t.
- IKAR sees Russia’s 2021 grain crop at 125mln t, down from 130.5mln t this season, including a decline in wheat production to 78mln t from 84mln t.
- Reports from within Russia suggest that 22% of winter wheat sown is in poor condition, the highest percentage since 2013.
- Ukraine has exported 21.1mln t of grain so far this season, down 11% year on year due to lower corn/wheat exports. Corn exports are seen at 11.8mln t (13.2mln t last year) with wheat at 5.2mln t (6.5mln t).
- The Chinese buying spree continues to pressure EU grain supply, pushing cereal prices to a two-year high as they continue to scoop up the reduced French wheat and barley surplus.
- Egypt’s state buyer GASC has purchased 345,000t of wheat over the past week (285,000t Russian/60,000t Ukrainian), swelling strategic reserves to at least five months.
- IGC cuts its forecast for 2020/21 global corn production to 1,146mln t, citing reductions in the US, Romania and the Ukraine.
- IGC raised its forecast for 2020/21 global wheat production to 765mln t, while raising its projection of Chinese imports to 7.8mln t.
- EU soft wheat exports beyond the EU were reported to have reached 9.3mln t as of 29 Nov, down 24% on the year, as the line-up of vessels suggested that the pace of exports was starting to slow.
- UK prices are down £2/t on the week (May21), although physical prices remain underpinned by the tightness of the UK balance sheet, and a drop in the pound due to negative comments over the potential EU trade deal.
- UK ex-farm prices continue to be supported, as the UK needs to get to, and remain, at import parity to attract larger volume of wheat imports during the second half of the season. However, with a few more questions being raised about the ongoing UK/EU trade talks, the apparent ‘close to a deal’ scenario seems a little bit less certain, with talks apparently ‘going down to the wire’.