15 January 2013

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  • We have seen another positive day in the grains with both US and European markets putting in positive gains in the continuation of direction picked up from Friday’s USDA report. Soybean prices have traded either side of unchanged.
  • In the UK the HGCA (Home Grown Cereal Authority) have confirmed that the long running spell of wet weather, which decimated the 2012 harvest, has not only severely disrupted autumn sowings, but in now also threatening spring planting. Waterlogged field conditions are keeping farmers and their machinery off the land as we approach the early spring planting window. Autumn wheat plantings only reached 80% of planned levels, some of which has been lost to flooding, and some to slug damage. Anecdotal evidence points to some rapeseed acres having been as much as 80% lost to slug damage. Key to next year’s harvest will be the choice of spring cropping, wheat or barley; much will be dictated by the availability of seed as well as grower preferences.
  • In a departure from normal patterns (which seems to be the order of the day) the UK has seen a significant switch from wheat exports to wheat imports according to latest figures. The level of imports topped 1 million mt in the first five months of the season, which compares with 370,000 mt a year ago, as exports reached 480,000 mt, compared with 1.25 million mt a year on year. To put the volume of imports so far this season into perspective, they have exceeded the total for the whole of last year. The swing from net exporter to net imported has hit a massive 1.4 million mt.
  • UK demand patterns appear little reduced as ethanol production at Ensus and the start up of the Vivergo plant continue to draw upon domestic grain despite corn top-ups being used by Ensus to boost grist starch levels. Feed production in the UK was higher than last year, which has supported grain consumption despite higher prices.
  • According to officials from IKAR (Institute for Agricultural Market Studies) in Russia, the recent cold snap may well have damaged susceptible wheat which was not protected by snow cover. Estimates ranging from 5 to 25% of winter wheat may be at risk from winter kill. The recent warmer temperatures have allowed snow cover to thaw completely in some areas and the subsequent cold  conditions (below 0℉) have created some lasting crop damage.
  • Key southern Russian grain producing regions sowed crops in dry conditions and poor establishment has left crops weak. Rainfall levels below half of normal have added to stress levels, and the regions experiencing such conditions account for up to 60% of winter wheat production in Russia.
  • The Russian situation appears to be similar to that of the US Plains, poor establishment in dry conditions followed by late dormancy extending the poor growing season adding to plant stress and the final straw being sudden onset of cold conditions bringing with it the risk of winter kill. On the back of the current season experienced in many wheat growing regions this is the last thing global wheat supplies need.