Jan 06 2016

Weekly Report 26/12/15

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WHEAT

US Wheat markets pushed lower again prior to the Christmas holiday, as the market struggles with strong export competition and ample global supplies.

CBOT March 16 futures fell 14.6Usc/bu and finished the week at 469.4Usc/bu.

The winter wheat crop in the U.S. went into dormancy in decent enough shape. Some of the key states will update conditions over the winter, but the next benchmark for the market is Jan. 12, when USDA releases grain stocks and seedings reports.

Winter wheat in the Black Sea region appears to be improving after a rough start, though wheat production could still be down in Ukraine and perhaps Russia, but this is not seen as a major concern to buyers, considering the heavy global stocks.

Argentina returns as a competitive player in the world market, after the new government lifted currency and export controls. The recent changes has seen the Argentinian Peso weaken by nearly 27%.

Last week saw Argentina win the Egyptian wheat tender, with price being the clear deciding factor of the trade. Egypt purchased 120,000t of wheat at approx. $175/t, with the best French offer at $187/t and Russia at $193/t. Making Argentina 10% protein wheat the cheapest in the world!!

Russian lobbyists are calling for the Russian wheat export tax to be reduced. Russia is now the only mainstream exporter with export taxes in place. The markets have so far reacted bearishly to this news, as a lower tax could spur on the Russian export pace, in turn adding pressure to global wheat prices. Even if it does not increase export pace, Russian wheat may become more price-competitive with a lower tax.

Weekly Report 15_12_26

Dec 22 2015

USDA raises global production again

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Wheat rallied last week posting solid gains from start the week. Heavy deliveries and a strong dollar pressured while technical buying helped wheat recover losses from last week. CBOT Wheat March 16 futures rallied 4% and finished the week 495.40 USc/bu. Up 16.8 USc/bu week on week.

The US winter wheat conditions have remained steady at 55% good to excellent following recent moisture events, and this should allow for the winter wheat to move into dormancy in very good shape.

The USDA Supply and Demand Estimates report released on Thursday saw minimal changes to the US wheat balance sheet. However Global wheat stocks forecasts were raised higher by 2.3 million tons. World wheat production remains at a record high and is raised 1.9 million tonnes to 734.9 million. The upward revision from the November report follows increased production estimates for Canada up 1.6 million tonnes to 27.6 million and the EU.

The USDA reports Australian wheat production will still be at 26 million tonnes, while ABARES recently reduced our production by 1.3 million to 23.96 million tonnes. ABARE also reduced their estimate of Australia’s 2015/16 wheat exports to 16.95 million tonnes from 17.53 million tonnes. (16.6 million In 2014/15).

Brazil’s wheat crop has been lowered again to 5.2 million tonnes down from the 6.2 million tonnes last month. Increasing the potential for wheat imports from the US during 2016.

India’s wheat crop plantings are raising concern with only 200,000 hectares planted vs 242,000 last year, as high temperatures delay plantings, however India still have ample stocks to cover any short/medium term requirements.

Dec 18 2015

Currency plays on the market

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CBOT March 16 futures finished the week at 478.60 Usc/bu. Down 8.8 USc/bu week on week.

This week the market continued to see consolidation and a bit of short covering, but with no real news wheat continued to push lower for the week. One big factor affecting the trade at the moment is the swaying in the currency market. A weaker Chinese economy and further weakness in oil and base metal pricing is lowering confidence for world economic growth. The US dollar strengthening over 2.6% over the last month which has failed to support wheat pricing.

The US winter wheat crop continues to improve and is now rated at 55% good to excellent up 2% from last week. US winter wheat is at 93% emerged vs 90% a week ago as the crop moves closer to dormancy.

Winter crops in the Western Europe are in good condition as they head into winter. The French winter wheat is currently rated 98% good to excellent vs 93% last year. French winter wheat plantings for harvest 2016 are at the highest levels in 80years according to the French Ministry. The total area of winter wheat planted in France for 2016/17 is estimated at 5.22million ha, 500,000ha up on the year before.

Ukraine has also benefited from recent milder weather, but still nearly 36% of winter crops were rated in poor condition. This is the highest percentage in recent years, last year 18% was classed as poor.

Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) cut its wheat production forecasts for 2015/16 by over 5% to 23.96 million mt down 1.3 million mt. CBH have also revised the WA grain estimate for this harvest to 12.5 million mt – down from their October estimate of 13 million mt. WA wheat production revised down 14% from the official Australian Government estimate at 7.5 million mt.

Dec 09 2015

Weekly Report 27/11/15

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WHEAT

CBOT Dec 15 futures finished the week at 479.2 USc/bu. Down 11.55 USc/bu week on week.

The overall message continues to remain that there is adequate wheat stock in the world today however production prospects in India and the Ukraine need ongoing monitoring.

Precipitation for a large portion of the US winter wheat area this week, allowing the USDA to increase the good to excellent to 53% up 1% for the week followed by cooler. US winter wheat is 96% planted and 90% has emerged.

Winter crops in Western Europe are generally in good condition heading into winter, but conditions remain poor into Ukraine and Russia, but with showers forecasted over the next ten days could ease concerns that were developing due to lack of rain. French winter wheat conditions are looking even better with 98% of winter soft wheat rated good to excellent compared to 93% last year. The latest EU Commission crop report also confirmed improvements for crops in Eastern Europe after mild weather earlier in November.

The Ukrainian supply situation continues to attract traders’ attention with nearly 36% of winter crops were rated ‘poor’ condition vs 18% last year. Indications their export potential in 2015/16 could be 8.5 million tonnes well below the volume achieved last year. The USDA estimate for Ukrainian production is 24.75 MMT for 2014/15, and some analysts are calling the 2015/16 crop could be as low as 20 million tonnes.

Traditionally Turkey has been a large buyer of Russian wheat, but Russia has stated it will stop supplying Turkey following recent military developments. This could present an opportunity for EU or Ukrainian exports to Turkey. Turkey is forecast to import 3.8Mt of wheat this season (USDA).

To read the full report click on the link below.

Weekly Report 15_11_27

Dec 02 2015

Weekly Report 20/11/15

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CORN/BARLEY

Dec 2015 CBOT corn futures gained 2.25 USc/Bu and settled at US$3.64 per bushel.

US corn is now 96% harvested without issue.

The UK is to supply 150k of high quality malt barley to china each year for the next 5 years, competition for Australia’s malt barley exports to China.
Japan’s use of corn in animal feed rose to 45.7% in September from 45.0% same time last year and corn most competitive alternative.
The IGC cut its forecasts for world maize production for 2015/16 by 3 million tonne to 967 million tonne in its latest Market Report.
The 5% decrease year on year was driven by downward output revisions for China and South Africa, which more than offset increases for the US.

Analysts estimate Brazil’s corn crop at 75% planted, below last year’s pace of 92%.

To read the complete report click the link below.

Weekly Report 15_11_23

Nov 25 2015

Weekly Report 14/11/15

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CORN/BARLEY

Dec 2015 CBOT corn futures fell by 12.4USc/Bu and settled at US$3.745 per bushel.

Global corn demand was forecast to decrease by 9 MMT and the negative change to the China’s demand profile by 5 MMT was a big contributor to the change. Corn demand was reduced in part due to being substituted with sorghum. The end result was a significant increase in global forecast corn carryout of more than 20MMT.

Aussie barley remains competitive into Asian homes with Western Australian FOB pricing around the US$185 level, Our barley is currently $5 – $10 over working into Saudi at replacement and while some offshore barley interest is coming to the market, no firm numbers have been shown.

BEANS/CANOLA

Soybean November 15 CBOT futures were unchanged for the week at 878.60USc/bu.

ICE Canola remained unchanged for the week at CA$460.6t

USDA decreased world bean stocks by 2.2 million mt, but increased US production by 2.5 million mt!!

US beans now reported 95% harvested vs. 92% last week. Brazil’s Conab raised its forecast for a the 15/16 bean crop to between 101.2 million and 102.8 million mt – up from 100.1-101.9 million estimated last month.

To read the full report please click the below link.

Weekly Report 15_11_14

Nov 18 2015

Weekly Report 6/11/15

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WHEAT

CBOT Dec 15 futures finished the week at 526.3USc/bu. An 11.30 USc/bu rise week on week.

Chicago December wheat futures managed to close just above its’ 200day moving average, a bullish technical signal.

Once again dryness in Ukraine, Russia and the US combined with harmful harvest rain in Australia cited as reasons for futures pushing higher

The Ukraine government is suggesting up to 20% of their winter wheat crop will not survive the lack of rainfall and will need to be reseeded in the spring. According to UkrAgroConsult, a little more than 14 million acres of wheat will go into the ground in Ukraine, a similar acreage number to 2006, when just 16.5 million and 13.8 million tonnes of wheat was taken off, respectively. However, analysis think that the 2016/17

Ukrainian wheat crop could yield closer to 19 million tonnes. Only 55% of the seeded wheat crop (or about 8.7 million acres) has emerged, and only 69% of fields were in “good or satisfactory” condition.

In Russia, the Ag Ministry reported that at least 25% of their fall-seeded crops are in poor condition due to a lack of rain, and 92% of the planned acreage was in the ground at the end of October. A harsh winter would result in re-seeding in the spring with something other than wheat.

US winter wheat 88% planted, up 5% but Good to Excellent only rated 49% up 2% from last week. This time year at 59%

France’s winter wheat 78% planted.

India have planted winter crop on 8.40 million hectares so far this year- down 3.8% from a year ago due to dryness.

Local pricing has followed the offshore market with Kwinana and Geraldton at the $300 mark.

To read the full report click the link the link below.

Weekly Report 15_11_06

Nov 10 2015

Weekly Report 30/10/15

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WHEAT

Wheat CBOT Dec 15 futures made positive gains for the week, and finished at

515USc/bu. up 24.4USc/bu week on week.

US wheat prices traded higher this week as better than expected export sales came amid forecasts for more rain in the winter wheat areas, and as fund participants sparked a round of buying.

The USDA has lowered Australia wheat crop estimate to 24 million tons

We continue to monitor the northern hemisphere crop progress, as the market is very sensitive to any developing production concerns.

The US winter wheat is currently at 83% planted up 7% from last week. The first condition rating was also released, the good/excellent score was 47%. This is the lowest rating in 3 years and well below analysts’ expectation for 55%.

The extreme weather map shows that large areas of Italy and eastern Europe experienced abundant rains. In Eastern Europe, the excessive rainfall hampered the sowing of winter crops.

In Poland, dry conditions have persisted since summer. The winter crops sown in September therefore germinated under unfavourable conditions which further worsened due to the low temperatures that occurred in October. Similar problems occurred in the Baltic countries, especially Lithuania. In Ukraine and Russia. Reports out of the Black Sea are suggesting 50% of the winter wheat is rated in poor condition. This story is unlikely to play out until the northern hemisphere spring.

The Russian wheat plantings pace is at the 5yr average, however in Ukraine continues to lag and is about 12 to 17 days behind where it should be and is at 82% complete.

Local pricing has followed the offshore market higher this week making gains of $ 6-9 across all zones. However the full extent of the gain has not been passed along, as basis continue to slide.

To read the full report follow the below link.

Weekly Report 15_10_30