Week Beginning Monday 5th March 2018
Posted by Anderson Grain Marketing on May 1, 2018 in AGM News | 0 comments
- The London LIFFE wheat future for May 2018 is unchanged this morning from Friday’s position at £141.75/T. This is £1.25/T higher than the opening trade a week previous.
- The London LIFFE wheat future for November 2018 has opened £2.05/T lower this morning at £145.45/T. This is £0.75/T higher than the week previous.
- The London LIFFE wheat future for November 2019 is again unchanged this morning at £145.50/T. This is £0.50/T lower than the week previous.
Old crop feed wheat for spot movement is this morning valued at £145.00/T ex-Farm. As for new crop values feed wheat for A/Available collection at harvest is valued at £140.00/T ex-Farm.
OSR values are down this morning – old crop OSR is still struggling to “start with a 3”! Please contact the office to discuss your movement requirements.
According to Agrimoney.com (please see their website for more on this), the trade is now well aware “of that fact that there is a drought in Argentina and crop loss has taken place; the question now is just how much production has been lost and if it can be offset with elevated production in other countries”. Furthermore, if this issue continues to persist (which according to this month’s long-term weather forecast it could well do) it soon won’t matter if it rains -“the clock will have run out”.
But have the worst of the potential production losses in Argentina already been factored in to current ex-farm values? And could the Brazilian harvest compensate for Argentinian losses?
This month’s World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA) are due for release on Thursday afternoon (8th March) – let’s hope that the report can provide the trade with some clarity.
The recent dry weather is also set to continue throughout the US southern plains. Some rain is expected to fall in the South-East later this week which will marginally improve moisture in the short term, but the long-term forecasts suggest that overall dryness will prevail for the rest of the month.
In Kansas, the largest planting state for US winter wheat, the proportion of the crop rated as good or excellent declined from 14% in January to 12% in February. AHDB have added that “the current level of damage can really be put into context when compared to last year’s crop at the same stage, when 43% of winter wheat was rated as either good or excellent”.
There was also no improvement to conditions in Oklahoma between January and February, where winter wheat crops rated as good or excellent remained at a worryingly low 4%. Crops in Colorado, Montana and Nebraska have also suffered.
To view the figures in full, please see the following link – this could be an interesting table to keep an eye on over the coming months.
Some forecasters are concerned that rain may not reach the worst affected areas for another fortnight, leaving an open window for conditions to worsen. Again, it will be interesting to read this week’s USDA report.
As far as I can tell this morning, last week’s “European and Black Sea cold snap” is poised to dissipate without too much damage”. Insulting snow cover was apparently “sufficient enough” to protect wheat from winterkill in most areas although some damage did occur in eastern Poland, Slovakia and the Czech Republic.
Here in the UK, the infamous “Beast from the East” gave the London wheat market a boost last week and it certainly inspired several buyers of new crop wheat. However, the UK is very much part of a global market and the weather further afield on the continent is much more likely to push or pull the market. Regardless, the bullish sentiment appears to have subsided this morning as new crop futures drift lower.
Meanwhile, the price differential between old crop feed barley and old crop feed wheat is continuing to narrow. This morning for example, some end-user feed barley bids are just £9.00/T behind the feed wheat bids. This is the smallest price differential we have seen all season.
The latest animal feed figures, courtesy of AHDB have confirmed that the amount of wheat used in the production of GB animal feed has increased by 2.2%; the amount of barley used has increased by a staggering 26.9% during the season to date.
Within the dairy sector for example, in terms of specific feedstuff produced this season, cattle and calf production increased by 211,500/T from this period last year. Factors likely to be considered are; Higher milk prices relative to those for animal feed and wet weather through autumn contributed to a higher demand for cattle feed. However, the newly announced price drop will likely influence the dairy industry going forward.