David Sheppard, Gleadell’s Managing Director, comments on the wheat market

WHEAT

• APK report Ukraine’s spring grain production at 32.1mln t on expectations of higher yields (13%) year-on-year.

• Ukraine April 1^st grain stocks exceed domestic requirements. End of season stocks reported at 5.5mln t (wheat 2.7mln t).

• Russia may return to Black Sea wheat export market after recent price fall due to state sales of intervention supplies.

• Argentine farmers have planted 8% more wheat in the 2013/14 season due to changes in Government export policy.

• Argentina’s new crop corn export sales placed at 12mln t – offered at discount to CBOT corn futures.

• USDA reports 36% of US winter wheat crop is in good/excellent condition – a deterioration in hard wheat areas and an improvement in soft wheat.

• USDA report corn crop 2% planted against 16% last year and 7% as five-year average.

• Wet weather is seen as aiding longer-term development of the US corn. However a prolonged delay would provide underlying support.  

• Dryness threatens Australian wheat supplies as planting starts – little rain expected in eastern grain belt.

• Strategie Grains cuts estimate for the EU-28 soft wheat harvest by 0.5mln t to 131.6mln t; raises corn to 66.5mln t. 

Global markets were rocked this week as slowing growth in China triggered a broad-based sell-off in commodities. The annual rate of growth eased back to 7.7% from 7.9% in the final quarter of 2012, with market expectations for a figure of 8%.

The global grain market continues to be driven by concerns over winter crops in the US, the slow pace of US corn plantings and reports of dryness in Australia. Freezing temperatures in the southern plains are causing potential damage to the HRW wheat crop, while snow/potential flooding is delaying corn plantings in the US corn belt.

European weather conditions have warmed up during the past week, prompting some signs of crop growth, although Strategie Grains again reduced its forecast for EU wheat production. France remains in a technical squeeze, with export demand supporting prices at a premium over MATIF (Paris wheat futures), leaving market shorts unwilling to deliver against futures.

In the UK, the drier, warmer spell has seen increased activity as growers try to get spring crops planted. However the warmer weather has been accompanied by very strong winds – hampering spraying and fertilising activities.

Market-wise it remains very quiet, with the UK following external markets and currency fluctuations. Internal demand remains lacklustre, and with imports continuing the strong pace (February reported at 256,067t bringing season-to-date to 1.86mln t) the carry-out projection seems to be growing by the day, assuming the crop was there in the first case! The market seems to believe there is an oversupply as LIFFE May 13 futures have moved from a £12 premium to MATIF to a current £13 discount.

Jonathan Lane, Gleadell’s Trading Manager, comments on OSR market

• The main driver in the UK market came towards the end of the week with the euro strengthening against sterling allowing the UK export market to become competitive. A number of cargoes have traded. The currency move was partially reversed on the back of comments by a member of the ECB regarding potential interest rate cuts. Ex-farm values are around £390.

• Crush margins remain poor in Europe and the domestic inter-merchant market remains quiet for both old and new crop. New crop trade is currently slow but with spring arriving on the Continent we expect this to pick up in the very near future.

• The soybean market is lacking any fresh news with the harvest continuing in Brazil and Argentina with no major problems at present. Attention is turning to US plantings.