Key Data Adds Pressure to Values
Posted by Anderson Grain Marketing on Apr 16, 2013 in AGM News | 0 comments
The last seven days have brought an incredibly quiet week to the grain markets. Both old and new crop on-screen values are virtually unchanged on the week previous whilst ex-farm values are slightly poorer due to a lack of fresh demand.
As promised, this last week has marked the arrival of three key reports; firstly, this month’s World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA), secondly the latest UK export/import data from HMR&C and finally the latest UK cereal usage from Defra – all of which appear to make better reading for the buyer rather than the seller.
This month’s WASDE were, as generally anticipated, bearish for both grain and oilseed values. Higher carry-over stocks from last season, improved production prospects in Brazil and a slackening of demand have all weakened the value of grains.
As for oilseeds, higher soybean production in South America combined with a reduction in Chinese imports (mainly due to both the current high value of soybeans and the on-going logistical issues over in Brazil) has amounted to a 2.5M/T increase in forecast global ending stocks; not exactly ideal for those of you “hoping for a return of £400/T” for old crop OSR.
Speaking of imports, the arrival of the latest UK import/export data from HMR&C for February 2013 towards the end of last week did little to soften the blow of the above. In February alone, 256,000/T of wheat was imported into the UK. Consequently, total confirmed wheat imports for the season so far (July 2012-Feb 2013) stand at a staggering 1.86M/T; 1.26M/T higher than the amount imported this time last year.
Wheat exports on the other hand in February stood at a poor 17,000/T, the lowest monthly export figure on record. Total confirmed wheat exports for the season so far (July 2012-Feb 2013) are just 547,000/T; a dramatic downgrade from the 2.1M/T we had exported by this stage in the season last year.
To add a little context to the above, Defra released their latest UK cereals usage data, also for the month of February 2013 earlier this week. Millers, starch and ethanol producers used almost 520,000/T of wheat in February, 68.5% of which was home grown; the lowest level since 1993 when just 66% was used following a supply shortage.
Comparatively, in February 2012, 90% of the total wheat used was home grown; it has hardly surprising that a further quarter of a million tonnes of imported wheat is expected to arrive this month.
Consequently, ex-farm values have come under severe pressure over this last week and trade volumes are thin; farm-sellers are reluctant to let large quantities leave the farm gate now that the mighty £200/T ex-farm has slipped off the table whilst end-users are reluctant to buy in large quantities whilst the market place looks so uncertain. Anything around this mark for early summer collection currently looks good value.
To view this month’s WASDE from the USDA in full PDF format, please see:
http://www.usda.gov/oce/commodity/wasde/latest.pdf
For more on the HMR&C data, please see: