May 11 2016

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

Apr 19 2016

Weekly Report 8/4/16

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BARLEY/CORN

Unlike Wheat, Chicago May-16 corn futures closed up on the week. The increase is thought to be prices recovering from the previous week’s losses due to the USDA report release and poor US planting conditions.

Corn settled at 361.4 US¢/bu, up 10 US¢/bu for the week.

Argentina’s corn sowings for 2016/17 is forecast to increase to 4.2Mha in light of policy changes. The corn area is expected to have a year-on-year increase of 24%.

The change is due to farmers being more incentivised to plant corn, because of new policies and better returns. The changes in policy include the elimination of export taxes and limitations for corn and wheat. Also with better crop practices, i.e. Crop rotations after years of back to back plantings of soybeans and improved seed technology, yields are expected to be high.

Following on from last month’s announcement of China scrapping its 9 year corn stockpiling scheme, China’s ministry of agriculture is planning on reducing the area planted to corn by 3.3 million ha in favour of increased soybean plantings.

To read the full report click the below link.

Weekly Report 16_04_09

Apr 19 2016

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.

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.

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.

To read the full report click the below link.

Weekly Report 16_04_02

Apr 06 2016

Weekly Report 24/3/16

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CORN/BARLEY

Corn prices have traded above the crucial support of US$3.60. March 16 CBOT corn futures settled the week at US$3.684 per bushel.

Argentine maize production is forecast to hit record highs this season, according to the latest estimates from the Argentine government on Wednesday. At 37 million mt, the latest estimate is well above the current USDA forecast of 27million mt and much more than the Buenos Aires Grain Exchange’s estimate of 25 million mt. The government have put the step change in maize production expectations down to a surge in late maize planting

China, which has been a key market for barley over the past two years, continues to display a trend of ever decreasing grain imports. China imported 261,000 mt of barley in February, the lowest monthly barley imports in 15 months.

BEANS/CANOLA

Chicago May-16 soybean rallied and settled at 905.2 US¢/bu on Thursday, the sharp rise owing to stronger trade data.

Canola followed the oilseed market and ICE Canola March 16 finishing at CA$470 up CA$4.52/t for the week.

Argentine soyabean output was pegged at 60.9 million mt by its government in the first official estimates of the season. This is above both the latest estimates from the Buenos Aries Grain Exchange at 58 million mt and USDA at 58.5 million mt. Harvesting has just begun in the country, with 1% cut by 23 March.

Chinese imports of soyabeans are running ahead of current forecasts this season, with further growth predicted for 2016/17. So far this season (Oct-Feb), China has imported 32.2 million mt, up 8% on the same period last season and ahead of the 5% growth rate the USDA expects in 2015/16 as a whole. Imports are predicted to grow by a further 3Mt in 2016/17 by US attachés – read more here. Higher Chinese demand could help soak up some of the global record crops expected this season.

to read the full report click the below link.

Weekly Report 16_03_24

Apr 06 2016

Weekly Report 19/3/16

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WHEAT

Wheat futures closed lower this week as the market shifted concerns from crop production weather concerns in the short term to burdensome stock levels and high prices relative to other competing nations.

CBOT March 16 futures finished the week at 462US¢/bu down 14.6 US¢/bu from the previous week. Prices fell below the 45 day moving average of US$4.69.

The market was pushed back late last week, as the weather forecasts show much less risk of freeze damage in the HRW area and showers forecasted in the back end of the 10 day forecast.

Recent winter wheat crop conditions released by the USDA show 56% of the crop is in good-to-excellent (G/E) shape in Kansas wheat and is jointing earlier than usual, with 6% of the crop in that phase, versus the 5-year average of 2%. Texas wheat conditions gained 4 points on the week, now sitting at 46% G/E. The Texan improvement was a surprise as the moisture remains a concern there and with the early move out of dormancy, farmers and traders are closely watching temperature levels for the next 2 weeks or so in the Southern Plains.

Drought has resumed in the main winter grain growing regions of Morocco. Field reports have seemingly confirmed the negative impact of severe drought on wheat crops, which could mean further export opportunities for the UK.

Although German crops have come through the winter in good condition according to the German association of farm cooperatives, wheat production will fall 1.7% to 26.10 million mt. the reduced levels is seen yields ease back from the very high levels last year.

Canadian wheat stocks will fall to their lowest levels since the 1950’s.The AAFC, Canadian Farm Ministry cut their wheat July 2017 domestic stock levels by 400,000t to 3.70 million mt. The downgrade reflected weaker wheat sowing expectations in the key Prairies region, as farmers switch area to alternative crops with greater returns.

EU soft wheat export forecasts for 2015/16 were revised up by Strategie Grains, the increase driven mainly by higher exports from Poland. Exports of soft wheat are now

To read the full report click the below link

Weekly Report 16_03_19

Mar 23 2016

Weekly Report 12/3/16

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BEANS/CANOLA

Chicago May-16 soybean rallied and settled at 889.2 US¢/bu on Friday, the sharp rise owing to strong soybean oil exports.

Canola followed soybean over the week with ICE Canola March 16 finishing at CA$465.3 up CA$13/t for the week.

Last week’s WASDE report saw US ending stocks at 12.5 million mt a 272,000t increase, on account of lower domestic demand. However on a global scale ending stocks were reduced to 79 million mt (still a record.)

The strength of the Brazilian real, as well as strong demand for US soybeans helped to support US soybean prices last week. On Friday, the Brazilian real rose to an over six month high against the dollar, reducing the relative competitiveness of Brazilian exports. A planned trucking strike in Brazil failed to materialize into anything meaningful. There were no reports of any disruptions. Another supporting factor has been delays faced by soybean shipments in Brazil, with ship line-ups of up to 57 days reported at southern Ports.

With Brazilian harvest now at 41% complete the Brazilian government crop supply agency Conab lifted its forecast for soybean production last week to a record 101.2Mt. The latest forecast is 250Kt higher than January’s forecast, on account of gains in area planted and yields.

To read the full report please click the below link.

Weekly Report 16_03_12

Mar 23 2016

Outside factors weigh on markets

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With last week’s USDA report not bringing a lot of change to the table other factors are starting to influence and define the grain market in the short term. The Australian dollar has grown legs and is trading in the .75c to .76.5 US cent range. If we go back to the 1^st of February the Australian dollar was trading at 0.7023 US cents. While the long term trend had been trending down this sudden surge caught most pundits off guard and has had a negative effect on current Australian grain values.

Weather patterns in the Northern hemisphere could be the next substantial driver of grain markets. There have been unconfirmed reports of below zero temperatures throughout the Kansas Plains growing belt and surrounding states. With grain in its early dormancy stage it is very susceptible to a late freeze. Similar scenarios throughout the Balkan states and the Black Sea could result in a production down grade. Expect choppy trade while these factors are being figured into the market.

Local export and domestic values have not been supported in the previous week. Growers holding grain on farm are having issues getting sales away mainly due to full capacity at local feed and packing houses. With patchy storms and rain forecast over the Easter period Lupin prices could come under pressure as well. The global balance sheet has been to the higher side for a long time and getting FOB sales away for Exporters has been extremely difficult with cheap grain being offered up from other origins and ocean freight being at an all-time low, causing Australia to loose its export advantage into Asia.

Expect trade to be quieter over the upcoming Easter period. If there are any price spikes over the short term look to price into these windows as buyer appetite may be limited. Finally all the best to an enjoyable Easter break and please be safe on the roads.

Chad Jefferis

Mar 16 2016

Markets Find Support

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Last week we saw the latest report from the USDA on global supply and demand. It focused on production and stocks as well as demand for grain and exports globally. Grain markets on a whole probably reacted a little more positively to the report than was expected with wheat corn and soy all making positive moves following the report and backed up by more positive gains during the week. A stronger Australian dollar and a basis that weakened recently has offset local prices though.

Northern Hemisphere weather markets are now starting to come into play with the wheat dormancy period starting earlier due to warmer and drier weather, leaving US winter wheat susceptible to a late freeze. Dry areas throughout the US may come under pressure and this threat along with damaging rain and hail recently in India’s Northern wheat growing areas have since aided the market. A quick snapshot of the latest USDA WASDE report as is most relevant to us here in Aus.

Wheat; a continuation of the recent bearish themes with an increase to stocks. Increases to the production forecast were made for Europe, China and the Black Sea, decreased in Brazil while notably a change to Aussie production decreased to 24.5mmt, finally. The market saw a decrease in US planted acres as a positive and was the main driver of Chicago markets in a US centric view on trading directly following the report.

Barley; again the report was not supportive of barley with supply up mainly in China and Russia. Global supply was increased 0.6mmt up from 145.16mmt to 145.83mmt. Demand was up by roughly the same figure. Stocks were increased from 23.6mmt to 24.2mmt.

Corn; bucked the trend and was slightly bullish. Chinese, Russian and US production was down by a combined 2mmt but the biggest drop came out of South Africa of 4mmt where the country has been gripped by drought. The market was most surprised by the cut to US corn yields however. Global supply decreased by 6mmt from 973.87mmt to 967.9mmt. Global demand was also decreased tempering the reports decrease to supply down 4mmt from 970mmt to 966mmt. Global stocks were decreased by close to 3mmt.

Soybeans; Beans were bullish with both greater consumption and forecast lower production. The reduction of US hectares was seen as key to reducing production overall by 1.4mmt. Global supply decreasing 1.1mmt overall, decreases to the US offset somewhat by increases to China production. Demand was increased by a healthy 1.85mmt form 270.86mmt to 272.7mmt.Stocks were decreased by 3.3mmt overall.

Tom Wake