Wheat Archives | Grain Brokers Australia

Global wheat values rally as the Australian harvest commences…

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International wheat prices continued to firm last week on the back of crop downgrades in the southern hemisphere, delays to the spring wheat harvest in North America, rumours of Chinese interest in United States wheat and firmer cash offers, particularly out of the Black Sea region.

All this drew attention away from burdensome global wheat supplies and prompted a round of short-covering by both the trade and funds, with the latter square or slightly long by week’s end.

The Chicago Board of Trade soft red winter December wheat contract closed Friday’s session at a fourteen-week high of 532¼ cents per bushel (c/bu). This is a rise of 78¾ c/bu, or 17.4 per cent, since the most recent contract low of 453½ c/bu, set on September 3. The contract rose 24 ¼ c/bu across the week, or almost 5 per cent, to register its seventh consecutive weekly advance.

Argentine wheat crop estimates continue to leak lower on the back of sustained dryness across crucial production areas. Recent rains in many regions have not been strong enough to help wheat fields left gasping for moisture after weeks of dryness.

Weather and crop forecaster Maxar is calling the Argentine wheat crop 18.7 million metric tonne (MMT), and at least one commercial trading house is said to be calling the wheat crop as low as 18.2MMT. This compares to the latest USDA estimate of 20.5MMT.

The Buenos Aires Grain Exchange (BAGE) suggested that while crop potential had stabilised in the east, yield losses could be as high as 40 per cent in southern Cordoba, eastern La Pampa and western Buenos Aires, and this number could potentially increase if critical spring rains do not arrive in time.

BAGE still put the winter wheat area at 6.6 million hectares, but it appears that they are preparing the market for a downward revision of their current 19.8MMT forecast when they update production estimates sometime this week.

The spring wheat harvest in the Dakotas and Minnesota continues to be dogged by rainfall, snow and blizzards. There is talk that any unharvested wheat is either going to be ploughed under for insurance, grazed out, or baled up for hay as the weather is now unlikely to remain favourable for long enough to get a header into the fields.

If that is true, global supply may end up losing 20 or 30 million bushels (550,000 to 820,000 metric tonne) when the USDA update production numbers in their November report.

The Canadian farmers are faring much worse, as rains and snow continue unabated. At least a quarter of the Canadian Western Red Spring (CWRS) wheat crop yet to be reaped. While 95 per cent of the wheat area in Manitoba had reportedly been harvested by last week, only 70 per cent of the Saskatchewan crop and 60 per cent of the Alberta crop was thought to be in the bin.

Rumours surfaced midway through last week of China wanting to purchase as much as 2MMT of wheat from the United States. There was no talk of wheat being on Beijing’s US$50 billion shopping list when news of the trade war breakthrough surfaced last week, and there are still no details, no grade breakdown, and no indication of anyone asking for offers.

However, news that wheat may now be included in the yet to be signed trade deal has generated some excitement in the US, and the futures and cash markets reacted accordingly.

Meanwhile, Egypt’s state-owned grain buyer GASC announced last week that it had purchased 405,000 tonnes of wheat for November 21-30 delivery in its latest tender. The purchase included 285,000 metric tonnes of Russian, 60,000 metric tonne of Ukrainian and the same quantity of French origin.

The average purchase price was around $212.50 FOB and once freight was added it equated to $230.70 C&F. The price reflected the significant rise in European Union and Black Sea markets since the start of the month. The average Black Sea FOB price was US$8.70 higher than the previous GASC purchase on October 9.

The higher price follows a rally in domestic wheat prices in Russia in recent weeks, and there appear to be several factors at play. There are reports of significant trade shorts that have been forced to cover when the market move caught them off guard, and there are also traders getting long in anticipation of further market gains.

The internal rally has also stoked up demand from the domestic sector in Russia. This is particularly the case for milling wheat which is reacting to competition from Kazakhstan due to their crop shortfall. Kazakhstan is the world’s second-biggest flour exporter, and a significantly smaller crop this season, along with poor quality, has sent buyers across the border to try and cover the supply deficit.

Here in Australia wheat prices were stable to slightly firmer last week despite a further deterioration in crop conditions in most regions. The National Australia Bank decreased its domestic wheat production forecast by 1.5MMT to 15.5MMT compared to their September number.

Interestingly, the rally in Russian wheat prices has seen the spread to Western Australian export values narrow to around US$30. This was as high as US$50 only one month ago but is still too high for domestic exporters to buy international demand, even with the freight advantage Australia holds into key Asian destinations.

Reaping may have started in a number of areas, but the harvest price pressure is still ahead of us. It remains to be seen how that will play out this season. There is likely to be a reluctance on behalf of the trade to repeat last year’s harvest buying spree unless they can compete into the export market. But how will the grower react if prices fall?

Uncertainty around the final size of the Australian wheat crop and the exportable surplus only adds to the conundrum.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Harvest action heats up in Europe …

Harvest action heats up in Europe …

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Many European regions recorded record high temperatures last week as the continent sweltered through its second heatwave of the summer. However, reaction of the grain markets has been tempered by expectations that this heatwave will be short-lived and is not expected to last long enough to cause severe losses in winter crop production.

Field conditions through most of Europe are generally quite good, and the trade is not expecting a repeat of last year’s terrible harvest. Those crops that were still at grain fill stage may lose between 0.25 and 0.50 metric tonne per hectare (MT/ha), but the heat will probably lead to a boost in protein levels according to local analysts.

Government agency FranceAgriMer said that 63 per cent of French wheat had been harvested by July 22, compared to 33 per cent only one week earlier, and 88 per cent at the same time last year. The dry conditions are ideal for reaping, and the French wheat harvest is expected to be almost completed by month-end with production in the 38 to 39 million metric tonne (MMT) range.

Harvest in Germany, the second-biggest wheat producer in the European Union (EU), is also progressing well. Reports suggest that it is now more than half completed with yields equal to, or even a little better than expectations.

The condition of the French corn crop had fallen to a rating of 67 per cent good to excellent before the record heat struck last week. This compares to 75 per cent a week earlier. The corn crop is at a critical growth stage and yields will fall dramatically if beneficial rains don’t arrive very soon. The latest heatwave will no doubt take a further toll on the health of the crop and this is expected to be reflected when crop rating numbers are updated this week.

There is talk in the trade of corn fields in northern France being cut for silage due to the heat; a trend that will be monitored closely in coming weeks. The trade is now estimating the country’s corn production at around 11MMT, versus 13MMT last year. Some rain over the weekend bought relief in some areas to pollinating corn crops.

Meanwhile, the International Grain Council (IGC) released its latest grain market report last Thursday. It was highlighted by a 6MMT decrease in global wheat production to 763MMT. While still a record, the decline is a reflection of smaller crops in the European Union, Russia and Canada compared to their June report.

The IGC pegged EU wheat production at 148.7MMT. This compares to their June estimate of 151.2MMT and 128.8MMT last season. There were downward revisions for France, Germany, Britain and Poland, primarily due to the June heatwave, which occurred when the crop was more susceptible to damage, as opposed to last week’s high temperature hit.

The Russian wheat crop was trimmed by 5 per cent from 79.5MMT to 75.7MMT. This is still higher than SovEcon’s latest forecast, which was pared by another 2.9MMT last week to 73.7MMT. The Russian agency also slashed its wheat export forecast for the 2019/20 marketing year by 6.2MMT to 31.4MMT. This is well below the 2018/19 export volume of 36MMT.

Moscow agency Rosselkhoznadzor (Federal Service for Veterinary and Phytosanitary Surveillance) said the Russian wheat harvest was 36 per cent completed as of late last week, with average yields coming in at around 3.7MT/ha, versus 3.83MT/ha last year. However, yields have been trending downward as harvest has progressed, a result of extremely dry conditions throughout June.

The IGC also cut the Canadian wheat crop by 5 per cent, from 33.6MMT to 32MMT. The crops in many regions showed stress after a dry spell through June and early July. Rainfall in late July has improved the soil moisture situation but conditions are reported to be quite variable from region to region.

Ukraine is reported to have completed 76 per cent of this year’s wheat and barley harvest. As of last Thursday, 19.7MMT of wheat and 6.7MMT of barley were in the bin. Wheat yields are reported to be improving as the harvest progresses with the average now sitting at around 3.85MT/ha, compared to 3.59MT/ha just a week earlier.

Some traders are reportedly increasing their Ukrainian wheat production estimates to 28MMT, or even higher, given the improving yield trend. This compares to the Agriculture Ministry’s estimate of 26.9MMT. The quality of Ukrainian wheat is excellent with about two-thirds milling quality and one third feed quality. This has caught the trade by surprise, leaving feed wheat shorts scrambling.

In further trade news, China’s General Administration of Customs (GAC) has reportedly granted permits for wheat imports from Russia, specifically from the country’s Kurgan region. This will compete with Australian origin wheat into China, particularly the northern ports. GAC has also approved soybean imports from all parts of Russia.

Closer to home, a group of private importers from the Philippines purchased 275,000 metric tonne of Australian feed wheat from CBH for October to December shipment at an average price of AU$240.60 Cost & Freight (C&F).

That is quite interesting when compared to Black Sea values. European harvest pressure sees Black Sea wheat prices challenging season lows with sluggish global demand and a lack of forward sales holding values at bay.

Last week Black Sea feed wheat was quoted at around US$187 Free on Board (FOB) for September. Add sea freight of US$33, and the 7 per cent import duty, the Black Sea origin price comes to US$235 C&F, more than US$5 under where the business was booked.

Does that represent a quality premium for Australian origin? Unlikely for feed wheat. Are replacement Black Sea values higher than are being reported? Maybe. Or is there a reluctance to book Black Sea origin over Australian at similar price levels? Hopefully so, as that will augur well for Australia’s marketing program into Asia moving forward.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Australia losing relevance as a global wheat exporter…

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The Australian Bureau of Statistics released their July export data last week and the grain numbers undoubtedly reflect the effects of last year’s drought and the many dilemmas for Australian exporters this year.

Wheat exports for July came in at 737,000 metric tonne (MT). This was up from the June number of just 585,000MT but well down on the 1.227 million metric tonne (MMT) exported in May, the biggest wheat export month of the current marketing season (October 2018 to August 2019).

Not surprisingly, Western Australia and South Australia accounted for almost the entire volume, shipping 494,000MT and 216,000MT respectively. The balance of 27,000MT were container shipments from east coast (Queensland, New South Wales and Victorian) ports.

In terms of destinations, Yemen, Vietnam and Japan were the biggest in July taking 113,000MT, 109,000MT and 83,000MT respectively. In June it was the Philippines, followed by South Korea and Japan with 216,000MT, 86,000MT and 81,000MT respectively.

Year-to-date wheat exports now stand 7.457MMT with 57 per cent, or 5.286MMT, shipped in the January 2019 to June 2019 window. Western Australia made up the lion’s share of Australia’s wheat production last year, and at a pinch under 6MMT, the state accounts for more than 80 per cent of national wheat exports this season.

South Australian wheat shipments stand at 1.102MMT since the beginning of October last year or around 15 per cent of national wheat exports. Total east coast wheat exports for the marketing year stand at just 355,000MT. The majority of that volume went out in containers, with Victoria accounting for 194,000MT, New South Wales 102,000MT and Queensland 60,000MT.

Exports of barley in July totalled 209,000MT, almost double the June shipments 113,000MT, with Western Australia making up more than 99 per cent of that volume. Malting barley made up 39 per cent of the July exports, and feed barley made up 61 per cent.

Japan was the biggest importer of Australia barley in July with 105,000MT shipped, followed by China at 62,000MT. This was the opposite of June, where China was the primary destination at 53,000MT, followed by Japan on 51,000MT.

Total exports of barley for the 2018/19 marketing year stand at a healthy 3.459MMT. December 2018 is the biggest month thus far at 1.107MMT, more than double the next closest month. The split between malting barley and feed barley is almost equal with 1.751MMT exported as malting and 1.708MMT exported as feed.

Western Australia has exported 3.143MMT of barley this season, almost 91 per cent of total Australian barley exports. At 279,000MT South Australian exports make up most of the balance, and Victoria has chimed in with 37,000MT of containerised trade.

Interestingly, China has been the biggest destination for Australia barley in the October 2018 to July 2019 window. They have taken 2.231MMT, or almost 71 per cent of total Australian barley trade to international clients. This is despite the ongoing anti-dumping investigation, which appears no closer to a resolution.

The investigation commenced in November last year, and the final decision of the twelve-month inquiry is due in November this year. However, Beijing can extend the investigation by a further six months, to May 2020, if they feel it is required.

While the potential outcomes remain uncertain, it appears that the Chinese government have their hands full on other fronts and are happy to let market speculation and confusion reign in the Australian market until a decision is announced.

On the canola front, July exports totalled 39,000MT, with one 33,000MT cargo loaded out of Western Australia and small parcels of container business out of both Victoria and South Australia.

Marketing season canola exports currently total 1.447MMT, with 79 per cent shipped from Western Australian ports and 14 per cent from South Australian ports. The balance of 7 per cent or 95,000MT were exported from Victoria with one bulk vessel in March and the rest via container trade across the season.

With a run of poor sorghum crops in northern New South Wales and Queensland, sorghum exports total a paltry 62,000MT for the first ten months of the marketing season. This is well behind last year and a long way short of the record 1.6MMT exported in 2013/14.

Last year may have been bad, but this season’s production outlook is not looking any better as the late winter dry continues into the spring. There are good pockets in most states, but widespread rains are required now, and then follow up falls for at least the next month to arrest the deterioration.

Australia has lost significant market share and relevance as a global wheat exporter as a result of last year’s drought and the considerable fall in the continent’s exportable surplus. A repeat of last year is a free leg up for the likes of Argentina and the Black Sea origins who have filled the void into Australia’s traditional Asian wheat consumers.

We have even seen export values out of both regions fall in recent weeks as the plight of the 2019 Australian harvest gets factored into global supply and demand calculations. One thing is for sure, winning back that business in the face of similar competition will not be easy when Australian production recovers.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Mixed fortunes for Canadian farmers…

Mixed fortunes for Canadian farmers…

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The first official Canadian crop estimates for the 2019/20 crop year were released last Wednesday by Statistics Canada, the national statistical office. Surveys of more than 13,100 farmers were conducted between July 4 and August 5 and farmers were asked to report their estimated area, yield and production of grains, oilseeds and special crops.

Adverse seasonal conditions have been blamed for a fall in production of wheat, soybeans and corn with either wet and cold weather in the east, or hot and dry weather in the west, taking its toll on anticipated production.

Total wheat production is expected to fall by 2.9 per cent, or 950,000 metric tonne, to 31.25 million metric tonne (MMT) compared to the 2018/19 season. However, this still comes in at 880,000 metric tonne, or 2.9 per cent higher than the five-year average. The fall is on the back of a 1.1 per cent decline in harvested area and a 2.1 per cent decline in anticipated yield to 47.5 bushels per acre (3.19 metric tonne per hectare).

Breaking the total wheat number down, spring wheat production is expected to be the largest crop in six years, up 1.17MMT (4.9 per cent) to 25.11MMT. Countering that increase is a 23.1 per cent decline in Durum wheat production to 4.42MMT and a 31.4 per cent fall in winter wheat production to 1.72MMT.

At 18.45MMT, Canada’s canola production is expected to be the lowest in four years and 3.9 per cent below the five-year average. This is a fall of 9.3 per cent, or 1.89MMT, compared to last season and was almost 1MMT below trade expectations. The main contributor to this drop was an 8.2 per cent tumble in seeded acres as farmers reacted to the ongoing trade dispute with China.

In the row crop sector, soybean yields are expected to fall by 5.4 per cent to 40.2 bushels per acre (2.70 metric tonne per hectare). The harvest area is expected to decline by 9.7 per cent to 2.3 million hectares leading to a production decline of 14.6 per cent to around 6.2MMT.

An anticipated increase in the corn area of 1.5 million hectares will not be enough to counter a 4.1 per cent decrease in estimated yield. Final production is forecast at 13.6MMT, a year-on-year reduction of 2 per cent and the lowest in five years. The culprit was cold, wet weather across the major producing areas at seeding time leading to a delayed planting and poor germination.

The big winner out of the decreased canola area is barley, with Statistics Canada expecting a 12.8% increase in harvested area to 2.71 million hectares. At this stage in the season, barley yields are estimated to average 66.4 bushels per acre (3.57 metric tonne per hectare), 2.2 per cent higher than last season. The upshot is a substantial increase in production this season to 9.64MMT, the highest since 2013.

Oats is a minnow in the global cereal picture. Nonetheless, Canada is a significant producer. Production is forecast to increase to 3.95MMT based on a 15.2 per cent increase in the area expected to be carried through to harvest. The actual seeded area came in at 1.46 million hectares, but only 79.4 per cent of the crop will be harvested according to Statistics Canada, with the balance either grazed out or cut for hay and silage.

It has been a grim year for Canadian farmers, as canola exports bore the brunt of the trade stoush with China. Earlier this year China halted imports of Canadian canola, citing pests in some shipments. Canada is the number one producer and exporter of canola in the world. Since the turn of the century, China has grown from a relatively minor market for canola to the world’s biggest importer.

The importance of canola to Canadian agriculture has expanded significantly over this same period. In recent years, China has been the biggest buyer of Canadian seed, purchasing up to 40 per cent of the crop. According to Statistics Canada, canola production contributes more than $26 billion to the Canadian economy each year.

The wheat story is the complete opposite to canola, with Canada’s share of total Chinese imports increasing to more than 60 per cent in the 2018/19 season, compared to just 32 per cent in the previous twelve-month period. At 1.9MMT, the total export volume to China was almost double the previous season and the highest since the 2004/05 marketing year.

Fortunately, the spike in wheat sales is partially compensating producers for the lower canola sales with the export gains coming at the expense of the United States (US) and Australia. US wheat exports to China have plummeted over the last twelve months after China imposed a 25 per cent tariff on US wheat.

In Australia, the drought on the east coast last year led to a substantial decrease in the exportable surplus and pushed Australian values above export parity. This resulted in decreased exports overall and a reduction in Chinese market share.

The weather has traditionally been the most significant influence on global grain production. Farmers across the world accept that it will always play the lead role in their fight for sustainability and profitability.

However, we have now entered a new era of tariff and no-tariff trade barriers. These will continue to significantly impact traditional international grain trade flows as Canadian farmers have discovered to their chagrin in 2019.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Egypt’s demand for wheat and corn is growing…

Egypt’s demand for wheat and corn is growing…

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Egypt’s demand for wheat and corn is growing…

Population growth and increased feed grain requirements are expected to drive up Egypt’s demand for wheat and corn in the 2019/20 marketing year, which ends in June 2020.

Egypt is the most populous country in the Arab World, and it is also the largest importer of wheat globally. Wheat has been a critical element of the typical Egyptian diet for centuries, and per capita consumption is amongst the highest on the planet. Wheat represents almost 10 per cent of the total value of agricultural production and about 20 per cent of all agricultural imports.

With more than 25 per cent of the population living at or under the poverty line, the government’s wheat policy is critical in assuring the food security of all citizens. A central component of government policy in this regard is the provision of low-priced bread to the population. This is accomplished through a number of subsidies at the different stages of the value chain: from subsidised inputs such as fertilisers to subsidies on the price of the final product, a flatbread called Baladi.

Under the Egyptian ration card system, around 80 per cent of the population, or 65 million Egyptians can purchase Baladi at a heavily subsidised price of 5 piastres ($A0.005) per loaf. This price has been fixed since 1989 and is a fraction of the current free-market price of around 65 piastres ($A0.06) per loaf.

One of the biggest challenges for the government moving forward is funding the ration card system. A weaker currency, growing population and high world wheat prices have pushed the cost of the program up significantly over the past decade. Reform of the scheme is a top priority for the government; however, a strong sense of entitlement means it is an extremely politically sensitive process.

An added complication is the government is the primary purchaser of all domestically produced wheat. To encourage farmers to plant wheat over alternative cash crops each season it pays an artificially high procurement price which tends to distort farmer crop rotations and reduces farm efficiency.

The principal wheat and corn production areas in Egypt are the Nile Delta region, along the banks of the Nile south of the delta, and in several newly reclaimed agricultural areas. Landholdings are very small, with 90 per cent of them being smaller than 1.3 hectares.

Nonetheless, constant irrigation, adoption of raised beds, a climate that favours an irrigated production system, fertile soils and new varieties that are heat tolerant and consume less water mean the average yields are quite high.

This season’s wheat production is forecast at 8.77 million metric tonne (MMT), up around 3.8 per cent on the 8.45MMT produced in the 2018/19 season. The harvest area is expected to be around 1.37 million hectares, resulting in an average yield of 6.4 metric tonne per hectare.

Egyptian wheat consumption is forecast at 20.4MMT in the 2019/20 marketing year, up from 20.1MMT the previous year. Increases are forecast in all three sectors, food, seed and industrial use. The rise in domestic demand is primarily attributable to population growth, which is running at around 2.4 per cent per annum. The population of Egypt ticked above the 100 million mark earlier this year.

Egypt’s wheat imports for the 2019/20 marketing year are forecast at 12.5MMT, with the General Authority for Supply Commodities (GASC) the primary purchaser. In the 2018/19 marketing year, it issued 26 tenders and imported 6.49 MMT of milling wheat.

In last week’s tender GASC purchased 240,000 metric tonne of Russian wheat and 60,000 metric tonne of French wheat for October 28 to November 5 shipment. On a FOB basis, the French wheat was offered cheaper than the Russian as the European Union’s major cereal producer works hard to shift excess stocks following a bumper harvest. However, at US$214.95 C&F, it ended up being US$1.15 more expensive than the Russian offer on a delivered basis due to additional freight costs.

GASC also purchased 180,000 metric tonne of Russian wheat the previous week for US$211 C&F. That is US$2.80 lower than last week’s Russian offers. Black Sea FOB values have been edging higher in recent weeks so maybe the season lows are behind us; only time will tell.

Indeed, the spate of wheat tenders in recent weeks suggests global consumers see more upside in this market than downside and are eager to take some risk off the table at current values.

Over the last six marketing years, GASC’s largest foreign suppliers have been Russia (17.49 MMT) and Romania (7.02 MMT), followed by France (4.14 MMT), Ukraine (3.05 MMT) and the United States (1.17 MMT).

On the corn front, Egypt’s 20919/20 season production is forecast at 6.4MMT off a harvested area of 800,0000 hectares. While the yield of 8 metric tonne per hectare remains constant, the production and harvested area are down from 6.8MMT and 850,000 hectares respectively the previous season. The decrease is due to increased plantings of rice at the expense of corn.

Corn consumption is expected to jump 4.3 per cent, to 16,9MMT, on the back of increased demand in the country’s poultry, dairy, and aquaculture sectors. Poultry demand is forecast to expand 2-3 per cent annually as the Ministry of Agriculture and Land Reclamation provides land and incentives for increased investment in the sector.

The dairy industry is also seeing significant investment, experiencing a growth rate of 3 per cent per annum in recent years. The sector is automating rapidly, driven by increased demand for fresh and refrigerated dairy products.

Higher corn demand means higher imports and they are forecast to increase by 3 per cent year-on-year to 10MMT. This is up from 9.7MMT in the 2018/19 marketing year and 9.5MMT the previous year.

From an Australian viewpoint, increasing demand for grain, wheat in particular, through the Middle East, Africa and Europe should mean that Russia will have less wheat to ship to traditional Australian markets in Asia. That said, the Australian wheat crop is getting smaller every day, and current export values are far too high to buy back lost demand.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Weekly Report 26/4/16

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WHEAT

Wheat futures rallied last week, as funds extended technical short-covering and reports of firmer export demand helped futures to climb.

CBOT March 16 futures finished the week at 457 US¢/bu down 16.2 US¢/bu from the previous week.

After a period of dryness which provided support to US wheat futures, rains over the weekend and with more on the near horizon, has put pressure on prices.

The USDA released the first weekly crop progress report for 2016 – the report was bearish for wheat with 59% of US winter wheat crops were rated as in a good or excellent condition, well above last year’s 44% rating. The rating is the highest for this stage in the season since 2010, when 65% of crops were classed as being in a good/excellent condition. US spring wheat is now at 13% planted.

Early forecasts for the 2016 Russian and Ukrainian wheat crops have been released restating concerns for Black Sea production next season. However, these concerns alone do not appear to be large enough to be to have any real effect on pricing.

The Ukrainian state weather centre has reduced the crop forecast by 35% from 2015/16 at 17 million mt. This forecast is based on losing approx. 1 million ha of the winter wheat planted area due to insufficient snow cover over. UkrAgroConsult however are forecasting slightly higher production at 18.5 million mt due to favourable spring weather, this is still far below this season’s crop of 26.5 million mt

Russia has forecast their crop at 57 million mt from 62 million mt this season, a cold weather forecast is expected for April/May, and as a result some growers are expected to reduce the spring wheat area they sow.

US wheat was the cheapest in the latest Iraq tender at US$238/mt CNF (Aussie wheat offered at US$249.75/mt CNF and Canadian at higher levels still!).

To read the full report click the below link

Weekly Report 16_04_26

Weekly Report 2/4/16

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WHEAT

Wheat futures ended the month of March up, as dryness continues to build in the US southern states.

CBOT March 16 futures finished the week at 473.2US¢/bu up 10.2 US¢/bu from the previous week.Chart160402 WR1

Eyes continue to remain focused on the US weather. Parts of Texas, Oklahoma and Kansas experienced low temperatures last week, raising concerns about potential damage to winter wheat crops. Conditions have also been drier than ideal, with incidence of drought increasing, 20% of Oklahoma was classed as experiencing some form of drought as at 29 March, up from 14% a week earlier Drier than usual conditions are also persisting in the northern spring wheat areas.

Chart160402 WR2

Last week the USDA released their prospective plantings report – This year’s total wheat area is estimated at 20.1 million ha, below the lowest trade and represents a 46 year low. The decline in the US wheat area has been driven by drops in both winter and spring wheat sowing – with spring plantings of 4.6 million ha, the lowest since 1972. The winter wheat area is expected to be 8% lower year-on-year (14.7 million ha).

French winter crops continue to be reported in good condition. Ratings as at 28 March are broadly comparable to 2015 and unchanged week-on-week for winter wheat at 92% rated good to excellent.

Russia is forecast to produce 61 million mt of wheat which would result in an export task of 23 million tonne and the Ukraine despite a rough start to their crop establishment in some regions is now forecast to produce a record 27.25 million tonne and to export a record 15.5 million tonne.

Chart160402 WR3

To read the full report click the below link.

Weekly Report 16_04_02

Weekly Report 12/2/16

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WHEAT

The grain market was quiet on Friday, with the US market slowing down for the Presidents Day Holiday weekend.

CBOT March 16 futures finished the week lower at 457.2US¢/bu down 15.4 US¢/bu for the week.

Chart 160212 WR1

This week saw the release of a very bearish USDA report on Tuesday evening our time. The USDA added 6.8 million tonnes to global wheat ending stocks to a record 238.9 million tonnes. The increase in stocks mainly came from reduced demand from India and China. Wheat usage in China is estimated to be 4.7 million tonnes lower than January’s report as the governments internal economic food policies favour other grains. Global production was revised higher in Argentina (+0.5 million tonnes) and Ukraine (+0.3 million tonnes). Australian wheat remained unchanged in the report at 26 million tonnes – way too high!

Egypt tendered for wheat on Monday and received no offers to do uncertainty about quality restrictions. Egypt in an attempt to clear that up Egypt’s Supply Ministry and GASC have both confirmed that they will accept shipments with up to 0.05% of ergot, and reissued a tender and purchased one cargo of Romanian wheat at US$190.88/t (Cost and freight). It is reported that Bunge has launched legal proceedings to challenge the decision made by Egypt to reject the French Cargo.

India is predicted to harvest its smallest wheat crop in six years after two successive years of below-average monsoon rainfall. The Indian government estimate that Indian wheat production is at 93.8Mt. This figure is down from 95.9Mt last season (USDA) and below government targets of 94.8Mt. This potentially opens the door for wheat imports from Australia.

Attaché estimate, Canadian wheat plantings will fall to a 5 year low of 9.26 million hectares in 2016. This estimate is below the initial estimate from the International Grains Council which sits at 9.5 million hectares.

Russian Ukraine wheat crop at risk. Recent mild temperatures and rainfall has reduced snow cover across central and southern Russia and eastern Ukraine. With some regions of Ukraine are seeing problems of freezing with almost a third of the crops at risk. A close eye will be kept on what the weather does now as we enter that final period of winter as there are a couple of scenarios that could play out and result in elevated levels of winter kill this year.

Chart 160212 WR2

Chart 160212 WR3

To read the full report click the below link

Weekly Report 16_02_12

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