Week Beginning 18th April 2016

The London LIFFE wheat future for May 2016 closed at £104.15/T on Friday evening (15^th April), £2.10/T lower than the week previous. In opening trade this morning the future is valued a further £0.50/T lower at £103.65/T.

Feed wheat for spot collection is currently valued in the region of £103.00/T – £104.00/T ex-farm buy buyer-interest is limited. Vivergo (Hull’s bio-ethanol plant) appears to be experiencing some ‘technical difficulties’ at the moment and with tomorrow’s fixings already cancelled, they will have had no intake for a week. This is adding pressure to merchants to keep things moving as May approaches; with two bank holidays and therefore two, four day weeks ahead, it isn’t exactly a time for getting behind!

As for new crop values, the London LIFFE wheat future for November 2016 is valued at £117.00/T this morning. Following a volatile week, the future has made several attempts to rally beyond the £120.00/T benchmark with little success.

Feed wheat for September collection continues to be valued at £110.00/T ex-farm.

This month’s World Agricultural Supply and Demand Estimates (WASDE), courtesy of the US Department of Agriculture (USDA), were released on Tuesday evening last week. Although the report was ultimately bearish, it was by no means as bearish as the initial trade expectations, limiting market pressure. Numbers given are for the current 2015-2016 trading season; we should see the first estimates for the 2016-2017 trading season in next month’s report which is due for release on the 10^th May. As always, a few key points worth noting are highlighted below.

WHEAT

• Global wheat production is now forecast at a record 733.14 million tonnes, a further increase on last month’s figure.
• The US wheat production estimate is unchanged, but it is interesting to note that alongside a production figure of 55.84 million tonnes, the US is forecast to have wheat ending stocks of 26.56 million tonnes this season, the largest figure since 1987.
• European production is raised by a further 1.5 million tonnes on last month’s figure to a record 160 million tonnes. European wheat exports are reduced by 0.5 million tonnes to 32 million tonnes due to tough foreign competition. Domestic wheat feeding is increased by 2 million tonnes on last month’s figure to 59 million tonnes.
• Consequently, European ending stocks are reduced from 20.16 million tonnes last month to 19.33 million tonnes.
• With overall supplies rising and use declining, global ending stocks are raised by 1.7 million tonnes on last month’s estimate to a record 239.3 million tonnes.

MAIZE CORN

• Global maize corn production is now forecast at 972.13 million tonnes, a further increase on last month’s figure. Global ending stocks are also increased to 208.91 million tonnes, a 2 million tonne increase on last month’s figure.
• Production for Argentina is increased by a further 1 million tonnes to 28 million tonnes. Exports are however raised by 2 million tonnes to 19 million tonnes. “Timely rain during February and March was beneficial to the crop following some earlier dryness in January” and exports have gathered pace since the start of the year.
• As for Brazil, there are minimal changes to this season’s estimates

OILSEEDS

• Global oilseed production is forecast at 527 million tonnes, marginally higher than last month’s figure.
• Global soybean production is virtually unchanged at 320.2 million tonnes.
• There are some marginal changes to South American soybean production but nothing overly important. Exports for Brazil were however raised by 1.5 million tonnes to 59.5 million tonnes.

Since the report’s release, heavy downpours during the current harvest period are said to be both delaying harvest progress and damaging crops. Early estimates, according to AHDB, suggest that at least 900,000 hectares have been affected and this area could be left unharvested. Furthermore, they have added that there are ‘significant concerns’ for further damage depending on the weather – current forecasts have given heavy rains for the next ten days or so.  

Simultaneous to the above, Chinese customs have since reported the highest level of soybean imports during March since 2008 ay 6.1 million tonnes. AHDB have added that this is not unusual for the time of year given the ‘seasonal arrival of South American supplies’, but the figure has certainly surpassed trade expectations. Competitive prices are said to have boosted usage, particularly in the pig producing sector.  

OSR for May collection is offered at £275.00/T ex-farm this morning with movement into the early summer months offering a small premium. As for new crop values, £270.00/T ex-farm currently looks like a realistic for September collection.