This month’s WASDE

The last seven days have brought a mixed week to the grain markets. UK feed wheat prices are generally unchanged for the second week running as they tread water ahead of the Northern Hemisphere winter grains harvests. Values are being dragged lower on the one hand by the perception of a bumper harvest, but encouraged higher on the other as lower prices bring a sudden surge in demand – particularly from China who tend to buy in large quantities when the price is right.

The 1^st July marked the beginning of the 2013-14 marketing season – however for the sake of simplicity and because our combines here in the UK haven’t yet left the shed (despite the odd twitter based rumour indicating otherwise) I will still be referring to the 2012 harvest as ‘old crop’ and the upcoming 2013 harvest as ‘new crop’.

This month’s World Agricultural Supply and Demand Estimates (WASDE), courtesy of the US Department of Agriculture were released last Thursday (11^th July) and the numbers are mixed.

WHEAT

• Global production for the 2013-14 season was raised to 698M/T – 43M/T higher than the previous 2012-13 season. Global demand is however also expected to increase – lower feed prices will encourage China to import larger quantities for meat production than we initially anticipated.

MAIZE CORN

• Global production for the 2013-14 season was increased to 960M/T – 105M/T higher than the previous 2012-13 season. The American crop is now forecast at 355M/T, slightly lower than initially anticipated but still an 80M/T increase on last year (concerns are however beginning to emerge regarding the current hot and dry weather across America’s corn belt – they will need some rainfall before the end of July when maize corn pollination should peak). Again, feed demand from China is expected to increase due to lower prices.

OILSEEDS

• Global production for the 2013-14 season now stands at 285M/T – reductions to production were made for Argentina, but notable increases were made to Paraguay, China and the US – the 2013-13 US soybean crop is forecast at a record 93M/T, 13M/T higher than last year. Global demand remains unchanged.

Russia have now combined around 14% of this year’s harvest, producing around 19M/T of grains. Winter wheat yields are said to be much better than last year at around 3.3T/Ha (putting them on target for the expected 50M/T wheat crop this year). The weather for much of the south-west is said to be hot and dry although wind speeds are fairly strong – spring sown crops are therefore expected to be in a fairly poor state once they get round to harvesting them.

According to both agrimoney.com and French based market analysts AgriMer, the French winter barley harvest is now well underway, around 10 days later than normal. Winter wheat crop conditions are still said to be ‘generally good to excellent’ whilst maize corn is late, but also said to be in a good condition. We should have some more ‘official’ numbers to play with by this time next week.

Old crop feed wheat is bid somewhere around the £165/T ex-farm mark for very late July/first half of August collection. There is also the odd buyer looking for some good quality soft wheat at around £182-3/T ex-farm for spot collection although tonnages are limited. Anything else of any quality would need to be priced accordingly (we would need to find a buyer!). Defra last week confirmed that a further 190,000/T of imported milling wheat was used by our domestic millers in May, the second highest monthly usage on record (first place goes to February 2013). Cumulative imported wheat usage from 1^st June 2012 to 31^st May 2012 stands just short of 1.6M/T – that’s almost three times the amount we imported in the equivalent period the year before (600,000/T).

New crop feed wheat is currently trading at similar money with November collection offering around £165/T ex-farm (the equivalent would also be tradable for October-November-December collection on an equal monthly quantity basis). Harvest movement would make somewhere in the very early £160’s/T ex-farm.

New crop feed barley should in theory be worth somewhere around the £140/T ex-farm mark, but buyers are reluctant to offer any more than £145/T delivered into store making it difficult to offer that sort of price on the farm gate.

New crop OSR is offered somewhere around the £305/T ex-farm mark for as available collection whilst November movement would make a £5/T carry.

For the week ahead, markets will probably be focusing on the American weather as maize corn enters the early growth stages; any signs of inadequate moisture levels could turn out to be supportive. Elsewhere London values will be looking to see how the early beginnings of the European harvest materialises – we could even be looking at winter barley being harvested here in the UK by the weekend in some southern regions (apparently).  A close eye will also be kept on Chinese imports – imported feed grains ex the Chinese dock are now around £80/T cheaper than they were pre-Christmas… very tempting for meat producers.

This month’s WASDE (in full PDF format) – http://www.usda.gov/oce/commodity/wasde/latest.pdf