Week Beginning 16th May 2016

The London LIFFE wheat future for May 2016 closed at £106.20/T on Friday evening, £0.80/T lower than the week previous. Further issues at Vivergo last week have continued to slow old crop movement although they have once again assured us that intake should proceed as normal this week.

Feed wheat for June collection is still valued at £105.00/T ex-farm this morning. For those of you with plenty of old crop wheat left in the shed who are flexible on movement, collection for the first two weeks in August is currently offered at £110.00/T ex-farm this morning and looks to be the best option.

Old crop feed barley has valued anywhere between £99.00/T – £104.00/T ex-farm over the last fortnight or so. I would suggest that anything above the £100.00/T+ mark would mark a selling opportunity, particularly given how quickly these barley prices are fluctuating at the moment.

As for new crop values, the London LIFFE wheat future for November 2016 closed at £117.20/T on Friday evening, £0.30/T lower than the week previous.

Feed wheat for September collection is still valued in the region of £110.00/T ex-farm and buyer interest is limited.

This month’s World Agricultural Supply and Demand Estimates (WASDE), courtesy of the US Department of Agriculture (USDA) were released on Tuesday evening (10^th May). The report was expected to be particularly significant as it included the USDA’s first look at the upcoming 2016-2017 trading season, alongside the usual monthly update to the current trading season’s figures. However, estimates for both trading seasons were generally in line with trade expectations, bringing little change to the grain market. A few of the key points are highlighted below (the report can be viewed in full PDF format via the blog section of our website):

CURRENT TRADING SEASON – 2015/2016

WHEAT:

Global production is increased to a record 734 million tonnes. There are a few changes made to various production / consumption figures, resulting in an increase in global ending stocks by a further 3.65 million tonnes to a record 243 million tonnes.

MAIZE CORN:

Global maize corn production is reduced by 3.3 million tonnes to 969 million tonnes, mainly due to a 3 million tonne reduction for the Brazilian crop (which is now forecast at 81 million tonnes). There are some small noteworthy changes to the US numbers, namely the increase in exports (+2 million tonnes), which resulted in a decrease to ending stocks (-1.5 million tonnes). Regardless, of these changes, ending stocks were only reduced by 1 million tonnes to 208 million tonnes.

UPCOMING TRADING SEASON – 2016/2017 (these number should be treat with caution, particularly the figures for the Southern Hemisphere countries – these are largely speculative and the majority of these crops are not even in the ground yet).

WHEAT:

Global production is forecast at 727 million tonnes, a 7 million tonne reduction on this season’s crop but the second largest crop on record (this season’s is the record largest). A very average crop is forecast for the US (smaller planted area but better yields than this season), but “large crops are expected in most key competing countries and favourable spring growing conditions suggest that yields will be well above trend for Europe, Russia and Ukraine”.

Global wheat ending stocks are forecast to rise even further with a figure of 257 million tonnes. If realised, this would be a record (pushing this year’s figure into second place).

MAIZE CORN

Global production is forecast at a staggering 1011 million tonnes, a 42 million tonne increase on this season’s crop. This is only marginally below the record figure of 1013.5 million tonnes produced in 2014-2015. Alongside this, global consumption is also expected to increase by a similar amount.

OILSEEDS

Global oilseed production for 2016/2017 is projected at 534 million tonnes, a 2.1% increase on the current trading season. US oilseed production is forecast a 113 million tonnes, a 3 million tonne reduction on the current trading season.

Global soybean production is projected at 342 million tonnes, an 8.3 million tonne increase on 2015/2016 – gains for Ukraine, Argentina and Brazil have offset the US reduction.

It is also worth noting that the USDA have forecast high soybean production for China as the government there reduces incentives to plant maize corn.