Volatility Continues

Feed wheat values have continued to fluctuate in accordance with currency again this week and have traded anywhere between £112.00-116.00/T ex-farm over the last seven days.

Once again physical supply and demand doesn’t appear to be any different and this month’s all important World Agricultural Supply and Demand Estimates (WASDE), courtesy of the US Department of Agriculture (USDA) didn’t reveal anything too surprising in terms of trade expectations.

With 35% of this season’s US maize corn crop now in the shed with so far no indication of yield, the trade eagerly awaited the USDA’s maize corn projections. With a larger-than-intended proportion of this year’s European crop downgraded to feed level due to quality issues, feed values will come under pressure if this season’s maize corn crop (another, typically lower priced feed grain) enters the market place in abundance.

According the USDA, Global maize corn production for the current 2014-2015 trading season is now projected at 987M/T. Back in the 2012-2013 trading season, global maize corn production topped 868M/T. Not exactly the news that the European farm sellers were looking for.

Meanwhile, milling wheat premiums appear to have levelled over the last fortnight or so, despite the fluctuation to the feed base value. According to the HGCA, just 15.0% of this year’s group 1 intended milling varieties have met the minimum required protein content of 13.0%; hence the larger premiums offered which have traded up to ‘a historically high 32% of the final delivered price”.

The potential for these milling premiums will however be capped by the cost of importing comparable qualities and with the French generally out of the market for the time being due to quality issues of their own, all eyes appear to be on the German milling trade. Delivered values are currently similar to those of UK wheat although with sterling heavily fluctuating against the Euro, this could soon change.

Elsewhere, OSR values have come under pressure this week after topping £242.00/T ex-farm towards the end of the week previous. The recent USDA report revealed their latest estimate for total global oilseed production this season, which currently stands at a record breaking 528M/T. This year’s European OSR crop alone is forecast at 23.5M/T; another all-time high.

With the majority of the Northern Hemisphere crop now in the shed, market attention is beginning to switch towards the impending Southern Hemisphere harvests, particularly the South American Crops which make a significant contribution to the New Year trade. This year’s Argentinian soybean crop, due to reach the marketplace by early February was forecast at 55M/T by the USDA last week; for perspective, Argentina produced a total crop of 47M/T back in 2013.

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