Farming News - Grain prices hit 12 months lows - late planting still causing minor worries

Grain prices hit 12 months lows - late planting still causing minor worries


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

 

  • USDA reports corn crop is now 95% planted against 100% last year and 98% as five-year average.  
  • USDA trims corn yields to 156.5 bushels/acre – ending stocks reported higher than trade expectations. 
  • Ukrainian 2013 grain harvest could rise to 53-54mln t, from 46.2mln t in 2012 – exports put at 25-27mln t. 
  • Egypt’s GASC reports wheat stocks sufficient until December, having already purchased 3.5mln t of domestic supplies
  • USDA reports 31% of the US winter wheat crop in good/excellent condition – poor/very poor reported at 42%, down 1 point.
  • USDA reports spring wheat 87% planted against 100% last year and 96% as five-year average.  
  • Russian Ag. Ministry trims 2013 grains and wheat harvest – grain crop is now at 93mln t with wheat at 50-54mln t

 

Although US farmers continue to struggle to plant the last few million acres of corn and spring wheat, USDA’s latest update left projected acreage numbers unchanged. The reduction in yield is seen as a potential legacy of the ‘late planted’ crop. When delving into the history archives, the lateness of the planting and reduction in yields follows the pattern seen during 2009, when the US ended up with a record yield!

 

Despite the cut in the corn yield this week, ending stocks were higher than trade estimates, which drove corn prices lower and, with US wheat yields increased, the bearish sentiment spilled over into the wheat markets.

 

EU prices followed the US market lower, touching 12-month lows during the week and breaking the pivotal €200 level. French farm office AgriMer reduced its forecast of soft wheat stocks at the end of this season to 2.3mln t, from 2.5mln t, citing increased intra-EU exports as the main reason for the reduction.

 

Russia has started its 2013 grain harvest, with southern regions reporting yields considerably higher than last season. With harvest set to progress in many southern EU/Black Sea states increased export inventories will soon enter the supply chain, potentially eroding any existing price premiums.

 

As this season nears completion, the UK remains the only ‘black spot’ in an improving EU outlook. Weather has generally been favourable over the past weeks and although we have witnessed some improvement in the UK crop, it is improving from a very poor base. The 2013 wheat crop will be lower in quantity, but due to the lateness of planting and slow growing conditions, may well end up higher in quality terms, a scenario that would be welcomed by all in the grain chain if the weather is kind from now on.

 

Farmer selling for 2013/14 is behind the norm for this time of the year, but with the global picture remaining bearish, further downside in price is the likely outcome.