OSR falls short of £310/T ex-farm

The London LIFFE wheat future for March 14 closed at £155.60/T on Friday afternoon (21^st February) – £3.10 lower than the week previous. As for New Crop, wheat for Nov 14 closed at £148.90/T, generally unchanged from the week previous.

In opening trade this morning, old crop wheat futures are currently trading £1.15/T lower. New Crop wheat futures have opened £1.40/T lower.

Buyer interest in both old and new crop wheat thinned last week after a busy end to the week previous and despite the slight increase in values on the trade screen, physical ex-farm values are mainly unchanged. Feed wheat for spot collection is currently offered around the £155/T ex-farm mark. April/May/June movement would make £160/T ex-farm on an equal monthly quantity basis – April alone should make £158/T ex-farm and there is plenty of buyer interest in opening trade this morning.

There is a nervous feel to the grain trade at the minute with regards to the civil unrest over in the Ukraine. Will the unrest disrupt their planned record export program? Will it encourage buyers of Ukrainian wheat to look elsewhere, adding pressure to alternative supplies?

According to agrimoney.com, the Ukraine has around 3M/T of wheat sold that has not yet been shipped. They added that farmers and merchants are currently ‘absent from the trade’ until the situation improves which will at least for now restrict any further grain movement. Their local currency is also weakening against the US dollar which could confuse their export program if the delays continue.

As for New Crop wheat, as available collection is offered at £140/T ex-farm this morning whilst November/December collection should make £145-7/T ex-farm. Opinion is still divided as to exactly what the extent of the damage done by the wet weather and flooding will be to the UK wheat crop with regards to both quality and quantity. Wider Europe is also facing similar prospects after a wet winter across much of the North-West.

Estimates are already being trimmed for this year’s wheat crop in Northern Italy, Western Spain, Western France and the UK – which combined could bring a loss of 560,000/T to European wheat output. Again, the extent of the damage done will not become apparent until the plants leave winter dormancy behind (although it is generally agreed that many plants are now vulnerable and a favourable spring will be required in order to help compensate for the above).

On the other hand, the Ukraine was anticipating a big winter wheat crop this year and is expecting very minimal winter damage. As little as 500,000/Ha will need to be replanted in the spring (according to local authorities there) – the majority of which will probably be made up with maize corn. Again the current civil unrest is a concern for the trade looking further forward, perhaps alternative supplies would be a safer option at this stage?

Elsewhere, old crop OSR values have edged higher again this morning with values for March/April collection currently trading in the region of £310/T ex-farm. Heavy rainfall across parts of South America towards the end of last week is thought to be delaying harvest progress there – a significant problem given that South America are currently exporting soybeans to China as quick as they physically can to compensate for the logistical issues in both Canada and Australia.

New crop OSR values are also significantly improved – as available collection is currently valued in the region of £285-290/T ex-farm.