Jonathan Lane, Trading Manager at Gleadell grain merchants, provides the latest insight into the global grain markets. Weather concerns from the UK to the black sea are governing the market.

Good demand from North Africa/Middle East has continued over the past week, with Egypt buying further volumes of US wheat. Black Sea offers have slowed, although remaining Russian grain exports are estimated at 4mln/t, and confusion reigns over the situation in Ukraine.

The USDA Outlook Conference this week projected a large US corn acreage, production (given current trend yields) and stock figures. With Brazil forecasting a record 60mln/t corn crop in 2012, this may ease the pressure on supplies - and therefore price - for the balance of this and next season.

EU wheat, supported by a ‘slow-down’ in Black Sea exports, remains tight with French and UK balance sheets finely balanced. There are still a few weather concerns around but, if the bearish global corn outlook is justified, wheat may lose one of its major price drivers. 

Without a bullish corn story, even with the likelihood of lower wheat production in the FSU, wheat stocks would still remain plentiful and pressure prices.

Summary

• The Ukrainian government denies curbing wheat exports and sees a good total grain harvest in 2012/13.
• Russian grain exports may reach 25mln/t in 2011/12. Exports to date are put at 19.8mln/t.
• Pakistan may match record wheat export volume as it heads for third successive bumper wheat crop.
• Western Europe’s main wheat crop should emerge largely unscathed from severe winter weather.
• USDA Outlook Conference has restated a large corn acreage of 94 mln acres.
•  Indian 2011/12 wheat output has exceeded the government forecast of 88.3mln/t – leading to a potential increase in exports. Indian wheat stocks are now three times the government-set target of 8.4 mln/t.
• Egypt’s GASC purchases a further 180,000t of US wheat for 11-20 April shipment – no Russian wheat offered.
• Saudi Arabia purchases 330,000 tonnes wheat (US/Canada/Australia/EU) – May/June shipment.
• Kazakhstan forecasts a potential halving in this year’s grain harvest to 16-15mln/t from the post-Soviet record last year of 27mln/t.
• Parts of England are reported as suffering from ‘crippling drought’ with river and groundwater levels lower than in 1976 – the hottest year on record. The word ‘drought’ normally induces a soaking month or two when used in the UK.

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