Grain market update: little change seen since last week

David Sheppard, managing director of Gleadell grains provides insight into the global grain market, which has strengthened, despite a fall in wheat price overall.

The market found some support this week from reports of the potential quality downgrading of a percentage of the Australian wheat crop and potential lowering of export projections from the Black Sea, either on a logistical basis or because of new crop concerns. However, bigger than expected crops from the southern hemisphere, and the sale of Argentine wheat to Egypt, caused the market to decline to the levels of last week.

Macroeconomics are still on the agenda, with the EU summit over the region’s deteriorating debt crisis and concerns over global growth prospects weighing on commodity and equity markets. The USDA is also due out tomorrow with the global supply and demand reports but, with little change expected, market direction will probably be driven by the news from Brussels.

Wheat summary:

• Ukraine grain exports doubled in November to 2.2mln/t, including 1.8mln/t of maize and 0.4mln/t wheat.
• China’s 2011 grain output seen up 4.5% to 571mln/t (of this 192mln/t is maize and 118mln/t wheat).
• French 2011/12 wheat exports to Egypt anticipated slumping to 0.2mln/t from 2.5mln/t last season.
• Kazakhstan’s 2011/12 grain crop more than doubled this year to a record 26mln/t due to  ‘physical’ constraints to cap exports.
• Australia sees record wheat crop of 28.3mln/t - rains have cut quality and 25-30% could be downgraded to feed grain.
• Stats Canada sees bigger than expected wheat crop at 25.3mln/t.
• Egypt’s GASC purchases 240,000 tonnes for February shipment wheat, including 180t/mt of Argentine wheat.
• Ukraine’s Farm Ministry report country may restrict exports of wheat in 2012/13 as winter wheat sowings suffer.
• Russia eyed bumper 2012 grain crop, but political issues could cause a risk over spring plantings.
• Ukraine’s Ag. Ministry cuts 2011/12 grain export forecast to 23-24mln/t on new crop worries.