Week Beginning 14th March 2016

The London LIFFE wheat future for March 2016 closed at £101.30/T on Friday evening (11^th February) – £1.15/T higher than the week previous. Although the screen may have experienced a volatile week, physical values were unchanged throughout with £100.00/T ex-farm offered for spot collection. Buyer interest remains stagnant for the April/May/June period – with such a large carryover forecast for the end of the season, end-users are hardly under pressure to make significant commitments at this stage.

In opening trade this morning, the wheat future is unchanged and bids remain in the region of £100.00/T ex-farm for spot collection.

The pound has valued at the equivalent of anywhere between EUR1.265 – EUR1.300 over the last seven days, hence the added volatility to the market. The movement appears to have had more impact on the OSR market with regard to physical ex-farm values – old crop has fluctuated anywhere between £254.00/T – £259.00/T ex-farm for spot collection over the last week or so. In opening trade this morning, April collection is offered in the region of £256.00/T ex-farm.

As for new crop values, the London LIFFE wheat future for November 2016 closed at £116.90/T on Friday evening (11^th February), £1.40/T higher than the week previous. In opening trade this morning, the future is unchanged.

Feed wheat for as available collection of the combine at harvest is this morning valued in the region of £107.00/T – £108.00/T ex-farm. September collection should make £110.00/T ex-farm for most this morning.

For those of you looking ahead to next year, £120.00/T ex-farm currently looks like a realistic offer for June 2017 collection.

According to agrimoney.com, early Russian spring grain planting is well ahead of year ago levels, ‘aided by unusually warm weather’. 440,000 hectares have now been drilled with spring crops, the majority of which is believed to be spring wheat.

They also added that the Ukraine’s early spring plantings are also well advanced given the time of year at 146,000 hectares.

Closer to home, the weather forecasts for the fortnight ahead are drier than normal for the UK and most of western, central and northern Europe, which should enable some good progress to be made with fieldwork. Locally, heavier Wold land appears to have dried out significantly over the weekend whilst other area along the Vale of York are certainly looking a lot better than they did a week ago.

This month’s World Agricultural Supply and Demand Estimates (WASDE), courtesy of the US Department of Agriculture (USDA) were released Wednesday evening (9^th March) and although the report didn’t exactly reveal anything particularly positive, it was by no means as bearish as initial trade expectations. Numbers given are still for the current 2015-2016 trading season – we won’t see any estimates for the upcoming 2016-2017 trading season until May. A few of the key points are listed below:

• WHEAT
  • Global wheat supplies are lowered 3.3 million tonnes, predominantly due to various decreases to production. Indian production is lowered 2.4 million tonnes & Australian production is lowered 1.5 million tonnes.  Regardless, 2015-2016 wheat production remains a record. Global wheat consumption is also marginally reduced but still remains a record.
• MAIZE CORN
  • Figures are generally unchanged – small changes made to South American export expectations / import expectations for China, South Africa & Mexico.
• OILSEEDS
  • Global oilseed production is projected at 526.9 million tonnes – slightly down on last month’s estimate. Small changes are again made to South American export expectations with slight increases for Brazilian soybean expectations. Chinese demand is also marginally increased on last month’s estimates.

     

    Brussels-based Cocereal also released their forecasts for 2016 grain production last week, with European wheat production forecast at 145.2 million tonnes – this is currently on the higher end of trade expectations. On closer inspection, they estimate the French wheat harvest at 38.8 million tonnes; this is a 1.5 million reduction on last year’s bumper crop. As for the UK, Europe’s third largest wheat crop, Cocereal have estimated a crop of 15 million tonnes, a 7% reduction on last year’s harvest.