Week Beginning 25th May 2015

• The London LIFFE wheat future for May 2015 closed at £111.20/T on Friday evening (22^nd May) – £3.10/T higher than the week previous. Ahead of the recent Bank Holiday weekend wheat values were volatile and trade began to slow towards the back end of the week. It is also important to note that the wheat future for May 2015 expires off the board this week and should therefore be treat with caution – the values on the screen have become extremely disassociated with the physical trade.
• In opening trade this  morning the London LIFFE wheat future for November 15 has opened £0.05/T higher at £122.50/T. New crop feed wheat for collection straight off the combine at harvest is bid at the equivalent of £115.00/T ex-farm. September collection should make £117.00/T ex-farm whilst £120.00/T ex-farm currently looks like a realistic offer for November/December collection.
• As for old crop wheat values, physical values are unchanged this morning despite last week’s slight rally. Local homes have bid the equivalent of £113.00/T – £115.00/T for July collection this morning which is actually £2.00/T lower than Friday afternoon’s bids. July collection is offering a £2.00/T premium to the June position. Feed barley values are still difficult to value and ex-farm prices have fluctuated anywhere between £102.00 – £106.00/T over the last week or so.
• According to the latest update of Defra’s cereal supply and demand figures (please see www.hgca.com for more), a massive 60% more wheat is forecast to be in commercial end of season stocks compared to last year. A ‘large crop combined with low farm gate prices’ is said to be predominantly responsible for the carry over and although it is something which the market has been anticipating since the decline in values after the January rally, it is a larger figure than many had initially expected. Commercial end of season stocks could top 3 million tonnes this year and Defra have estimated that only 1.4 million tonnes of this will be ‘needed in reserve’ by processors to ‘tide them over until the new crop is available and ready for processing’. Consequently, the amount of ‘free stock’ available could reach 1.6 million tonnes – three times the amount that was left over last year which was then carried over into the current trading season.
• ‘Moderate temperatures and recent rainfall have boosted the outlook for this year’s Ukrainian crops’ say the Agricultural Ministry there. Total grain production is now forecast in the region of 60 million tonnes – two million tonnes higher than initial estimates earlier this year but slightly below the 63.8 million tonnes that was harvested in 2014. Wheat should account for 21-22 million tonnes of this figure. Last weeks USDA WASDE suggested that the Ukraine is to ‘remain an important player in the wehat export market next season’, accounting for nearly 7% of global exports. As a result, ‘crop conditions in the country will remain under scrutiny in thr weeks ahead with the political situation adding additional risk’.
• According to the French Agricultural Ministry, 91% of the French wheat crop is now in a ‘good or very good condition’ – a significant improvement on the 76% which was rated in this condition at the same time last year. 58% of this wheat is now headed, a little behind on this time last year but this isn’t necessarily a bad thing given the current weather forecast there. 100% of this year’s French barley crops are now headed and 90% of this is described as being in a ‘good to very good condition’.
• Russia’s spring grain planting campaign is continuing to lag behind – 19 million hectares have now been drilled with spring grains, around 60% of the intended area. By this stage in the season last year, almost 22 million hectares had been drilled. Opinion continues to be split regarding this – many blame the current economic climate whilst others are blaming the recent wet weather. On closer investigation by agrimoney.com (please see the blog for more on this), the areas drilled are extremely localised; Southern regions (Krasnodar and Stavropol) are finished drilling, central areas are making good progress (Volga and Siberia) whilst Northern regions are significantly behind with progress. This could suggest that wet weather is delaying progress rather than any specific economic issues although again this is being widely disputed.
• To finish, OSR values are unchanged this week with old crop valued somewhere in the region of £255.00/T – £260.00/T ex-farm. Sales appear to have slowed over the last fortnight or so as old crop supplies begin to decline. New crop values are slightly higher this week, presumably due to a potentially late start to this year’s harvest. £240.00 – £245.00/T ex-farm currently looks like a realistic offer for as available collection off the combine.