- Brazil’s CONAB released its latest 2013/14 crop updates in which soybean output was cut to 85.44 million mt from February’s 90.01 million mt. Export potential was also reduced to 45.3 million mt from previously anticipated 47.4 million mt. Corn output was forecast at 75.18 million mt, which was also a reduction, albeit of lesser magnitude than in soybeans, from 75.47 million mt. The Brazilian wheat crop was reduced by 300,000 mt at 5.5 million mt. Hot and dry weather conditions were cited as responsible for the downgrades.
- Interestingly, the impact upon Chicago prices was not taken as bullish, presumably as reduced Brazilian output had already been well publicised and was factored into prices. Soybean markets fell almost 2.5% (basis May ’14 contract) although closing off the lows of the session.
- In contrast, Chicago wheat markets rose sharply on further fund purchasing. The outlook for US 2014 wheat production is a reduction on 2013 output although this is hardly fresh news; the January winter planting report put soft red wheat acreage 16% down, which, at trend yield and average abandonment, gives an output of 440 million bu. This has been in the public domain for a long time and should not be a price driver today. The remaining wheat news remains the uncertainty that exists over the Russia/Ukraine situation, which may become clearer after the Crimean referendum on Sunday.
- Closer to home, Stratégie Grains and the HGCA reported positively on UK winter cereal crop conditions despite the wet winter conditions. Spring sowing concerns are also evaporating as recent drier conditions are allowing field work on lighter land and the prospect of getting onto heavier ground in coming days looks increasingly likely. The ten day weather forecast has encouraged the favourable view. In terms of output, Stratégie Grains latest numbers suggest a wheat crop of 15.215 million mt, which is an increase from last year’s 11.921 million mt. Total barley output was forecast at 5.8 million mt, down from 7.092 million mt almost entirely as a result of reduced spring cropping, which was forced last season due to impossible winter planting conditions.
- Finally, the Egyptian supplies minister is to form a committee to remove obstacles in wheat tender specifications. Maybe this will placate the French!