WHEAT

Agricultural markets had a rough week as the market reacted to the volatility in the Chinese economy. China is a major importer on the global market, so any reduction in the Chinese economy raises concern on future demand. CBOT March 16 futures finished the week slightly lower at 468.4Usc/bu down 0.8 USc/bu for the week.

With some of the US hit by storms late last month, concern was rising about the condition of the growing winter crop. The latest USDA crop condition rating suggesting that the unfavourable weather thus far had done little damage to the 2016 crop. With Good to Excellent ratings for selective states all over 50%.

US Wheat continues to struggle to find export demand. With shipments of US wheat at the lowest levels since the marketing year began. For the week ending 31 December the US  exported only 76,500t of wheat well below 200 – 400k analysts’ expected.

Furthermore Argentina’s 2016 wheat production has been forecast up to 10.1Mt by the Buenos Aires Grains Exchange in its latest weekly report, 0.6Mt higher than the previous estimate. The upward revision is due to higher than expected yields. Wheat exports from Argentina are expected to increase!

An increase of supply to an already ample market combined with the slowdown in the Chinese economy and a stronger US dollar points to further pressure on US exports.

Weather conditions across parts of Poland, Ukraine and Russia saw temperatures plummet low enough to cause possible winter kill. Nevertheless also bringing greater snow cover to protect the winter crops ahead of harsher weather in the coming weeks.

To read the full report click the link below.

Weekly Report 16_01_08

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

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