WHEAT - David Sheppard, managing director

USDA attaché sees Egyptian 2011 wheat output at 8.7mln/t, up from 7.2mln/t in 2010. High prices and other inducements has allowed the government to achieve its procurement target, imports seen lower. 

Russian spring grain sowings are seen picking up pace, with 11.1mln hectares or 37% of the targeted area planted as of 13th May. This compared with a similar planted area at the same time last year, with analysts predicting a total spring sowing area of approx 29mln hectares. 

Ukrainian farmers have sown 6.5mln hectares of spring grains for the 2011 harvest as of 10 May, which is practically the same area as a year ago. Officials project spring grain area at 7.6mln hectares. As of 1st May the Ukrainian grain stocks totalled 8.3mln/t, up 9% from the same period in 2010. 

French environment minister reports ‘country already in a situation of crisis’ with limits being imposed on water consumption, amid signs a prolonged dry spell that has hit grain crops would continue.  Agritel, in its first estimate of the 2011 French harvest, projected output could fall by 11% to 31.7mln/t, with the drop in expected yield being a direct consequence of the lack of rain during the past three months.  Strategie Grains also cut its forecast of the French wheat crop by over a million tonnes, to below 35mln/t, but warned it may have to further trim its figure. 

Concerns continue about parched German wheat after weekend rains were disappointing. German farm co-operatives Association forecasts the country’s 2011 wheat harvest is likely to fall 7% to 22.3mln/t, stating that drought damage has taken place, especially in north Germany. 

Western Canadian farmers took advantage of favourable weather to push overall crop seeding to 20% complete.  However, this is still well behind the normal 50-60% planted by this time, due to extensive flooding/melting snow. 

UK exports slowed in March, with 100,673 tonnes being shipped (lowest monthly figure so far this season), with the Netherlands emerging as the largest UK customer. Cumulative exports for the season to date stand at 2.34mln/t. 

Weather issues continue to drive the market, as continued dry weather in key north European producing regions has analysts and traders trimming crop estimates. French conditions are described as ‘critical’ with any rains now only seen limiting further losses, with drought damage ‘irreversible’. Slow US corn plantings and declining crop ratings for US winter wheat are also seen adding support to the wheat complex, with London new crop wheat futures up almost £30 since the beginning of the month. There will be a crop in the UK, France and Germany, albeit lower than previous projections, with further losses seen increasing support. However, with crop prospects in Eastern Europe and the Black Sea regions remaining favourable, and key importers projecting increased crops/lower imports for 2011/12, the market, following the recent sharp rally could be open toprofit-taking at some stage – when or if it rains! 

 OILSEED MARKETS - Jonathan Lane, trading manager

Agricultural Commodities have had a strong rally this week as fund selling was exhausted for a while.  The main reason for the strength in Europe is weather concerns, which continue to keep the market firmly bid.  Matif Rapeseed futures hit contract highs as estimates of EU crop losses began to accelerate.  The German farmer/co-op association put production down 23% and similar losses are expected from France and the UK. 

European maps suggest near normal precipitation in most areas but that has been true for some time and the forecast rain simply has not arrived on a widespread basis.  Meanwhile, preparations are under way across the UK to ensure any potential drought doesn't harm the country's agriculture.  Assessments are being made to determine the likelihood of a drought in the longer term. Forecasters now predict a heat wave in the coming weeks and this means May could prove to be the hottest since records began 353 years ago