Wet Weather in America Adds Volatility, Not Value

It has been a mixed week for new crop values over the last seven days as markets appeared to open for the week’s trading with a slightly firmer tone before slowly retreating.

Despite the generally bearish outcome of last week’s Supply and Demand Estimates from the US Department of Agriculture (USDA), grain futures have latched on to the notion of “poor weather over in the US” this week following the release of the report – which could potentially delay harvest progress further south and “significantly damage” crop quality further North.

Heavy thunderstorms over the weekend and a wet forecast for the week ahead initially added to the excitement before the USDA confirmed on Tuesday evening that the “recent wet weather has by no means damaged the crops to the extent in which the trade was expecting”.

The recent wet weather has also added some volatility to the OSR markets with new crop OSR now fluctuating in the region of £250-55/T ex-farm for as available collection at harvest. Opinion is again divided on this; hence the volatility. There is however is a general consensus that this year’s soybean crop will not require much more wet weather at this stage.

Optimism remains for a good Black Sea Harvest this year, the majority of which appears to be unsold due to the recent political unrest there (some independent reports would suggest that they have around 50% less sold forward than normal). By this stage in the season, any European buyers who are looking for August Black Sea deliveries would have usually made at least the majority of their commitments by now – consequently, both the Ukraine and Russia could become very aggressive sellers at harvest.

Closer to home, this year’s winter barley harvest is now well underway in both Spain and the South of France and trade rumours would suggest that they could be into winter wheat by the end of the week.

Furthermore, European Union crop monitors have further “raised prospects” for this year’s crops, citing a “predominantly positive” yield outlook as responsible for the upgrade. Consequently, this year’s European soft wheat yield is now forecast at an improved 5.3T/Ha – almost 5% higher than last year’s output.

Feed wheat for as available collection at harvest has therefore fluctuated anywhere between £129-133/T ex-farm over the last seven days as the sheer potential of this year’s European and Black Sea Crops appears to be outweighing (or at least overshadowing) the wet weather over in America.



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