- Our weekend roundup commentary seems appropriate today; the morning news today reported that the UK, which is less than six weeks away from mid-summer, was due to receive snowfall. We felt that this was fanciful and typical scaremongering, however it has proved correct as a number of regions across the UK have indeed received snow today. Little wonder that harvest dates are being viewed at the later end of the spectrum with little prospect of early crops. August wheat is very much, at present, an old crop commodity rather that a 50:50 split between old and new.
- News that France has once again (actually the third time) gone back into recession has done little to bolster confidence in Euroland, seemingly Germany has only just missed the recessionary trigger. On the news the Euro has hit its lowest level in around six weeks.
- In the US, the strong US$ has had the inevitable consequence of adding a weaker tone to commodities which are already pressured following the latest USDA report.
- It feels very much as if we are shaping up for a long season of weather issues from which markets will take their direction. Ukraine and southern Russia have been dry and temperatures have risen sharply in recent days helping to progress spring plantings. However, the recent dry conditions have accelerated soil moisture evaporation; if it had not been for heavy snow melt following the winter soil moisture deficits would be causing concerns right now. That said, estimates of Ukraine wheat output have been cut to a range of 19.9-20.23 million mt from original ideas of 22 million mt. Last year’s dry conditions left output below 16 million mt and rain is needed if we are not to see a repetition this season.
- Similar conditions appear to be stressing wheat crops in southern Russia. Temperatures are well above normal and rainfall has been limited, and insufficient to offset the evaporation caused by the elevated temperatures. Extremely dry conditions are apparent in the four key wheat districts of Stavropol, Krasnodar, Rostov and Volgograd. The difference between Ukraine and these regions is that the ground water reserves are more limited and unlikely to be adequate to support crop development going forward unless rain, and plenty of it, falls very soon. The last six to eight weeks have been dry and whilst spring planting has progressed well, it is at the expense of germination and development.
- In other news today rapeseed crops in Europe have mixed prospects; the UK crop is poor at best having suffered from late planting, excessive winter wetness, pigeon predation in early spring leaving overall production prospects very much in question. Conditions in France are mixed with the northeast looking poor whilst German conditions appear to be improving. The warm and dry conditions which are hitting wheat in Ukraine and Russia are also potentially impacting their rapeseed potential. To cap it all, Australian output may well reach a three year low on dry conditions according to Oil World.