Week Beginning 13th June 2016

The London LIFFE wheat future for July 2016 closed at £111.60/T on Friday evening (10^th June), £4.15/T higher than the week previous. Fluctuating currency, ‘Brexit’ concerns and the latest USDA report have all added volatility over the last seven days and judging by this morning’s market activity, I would imagine that the pre-Referendum volatility could be here to stay.

For those of you with old crop wheat left in the shed, £112.00/T – £113.00/T ex-farm currently looks like a realistic offer for July collection. Buyer interest is good, presumably because the values are simply at a discount to new crop values.

Feed barley is valued at £100.00/T ex-farm for spot collection.

As for new crop values, the London LIFFE wheat future for November 2016 closed at £122.60/T on Friday evening, £2.95/T higher than the week previous. In opening trade this morning, the future was initially valued £2.40/T higher at £125.00/T. By lunchtime, the value of the future had eased back to £123.90/T.

Feed wheat for September collection is currently valued at £118.00/T ex-farm. Further forward, £125.00/T ex-farm looks like a realistic offer for Jan/Feb collection.

This month’s World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA) were released late Friday afternoon (10^th June). Although the report is generally bearish, some of the production numbers are slightly lower than those estimated by the trade towards the end of last week.

Please note that all figures refer to the upcoming 2016-2017 trading season which commences on the 1^st July unless stated otherwise.

WHEAT

– Global wheat production is forecast at 730.8 million tonnes, a 3.8 million tonne increase on last month’s estimate.

– US wheat production is now forecast at 56.5 million tonnes on “improved prospects for the Hard Red Winter wheat crop in the great plains following excellent growing conditions throughout the spring months.” US winter wheat yields are now forecast to be a record high. US ending stocks are now forecast at 28.6 million tonnes, the largest for 29 years.

– Production for the European Union is forecast at 157.5 million tonnes, a 1.5 million tonne increase on last month’s estimate. The USDA added that “the EU production increase is entirely for Spain and reflects favourable growing conditions, as confirmed with satellite imagery data. The production forecast for France is unchanged despite heavy rain for the month of May. Although abundant precipitation may have reduced yield prospects in low-lying areas, it may increase yield potential elsewhere. French wheat was in excellent condition prior to the onset of the rain and expectations for a return to dryness in the latter part of the grain filling stage are anticipated to further mitigate crop losses”. Exports for the European Union are forecast at 35.5 million tonnes, a 1.5 million tonne increase on last month’s estimate and a 2.5 million tonne increase on the current trading season’s estimated figure.

– Global wheat ending stocks are raised fractionally on last month’s estimate at almost 258 million tonnes, a record high.

MAIZE CORN

– Global maize corn production is forecast at 1,011 million tonnes, a marginal increase on last month’s estimate.

– US maize corn production is forecast at 366.5 million tonnes, US maize corn exports are raised 1.5 million tonnes on last month’s estimate at 49.5 million tonnes. The USDA added that as of early June, “total US maize corn commitments (accumulated exports plus outstanding sales) are above year-ago levels for the first time in the current 2015-2016 trading season. This is due to reduced corn production in Brazil and extensive harvest delays in Argentina, both of which have improved the relative competitiveness of US maize corn in recent weeks. This trend is however set to continue as we enter a new trading season, at least for the first few months anyway”.

– Brazilian maize corn production for the current 2015-2016 trading season is lowered 3.5 million tonnes on last month’s estimate to 77.5 million tonnes.

To view the report in full please see:

http://www.usda.gov/oce/commodity/wasde/latest.pdf