- Paris wheat hit a contract high close (but not quite a contract high) as weather concerns continue to bite and internet pictures circulating of crops on fire amid all time temperature highs across much of Europe (although not Greece!). Wheat is probably the least affected, particularly compared with corn and spring barley and the USDA’s latest 4% production decline may prove to be optimistic. Matif corn took its gains to €33 in under two weeks as the current heat shows little sign of relief and non-irrigated crops are reported to be in a mess and irrigation controls/quotas are being questioned, added to which any precipitation across Ukraine in the next two weeks has been removed and temperatures are forecast to rise. The crucial crop pollination period is about to commence, and the timing could not be worse.
- Egypt purchased a single 60,000 mt cargo of wheat for 1-10 August shipment from Romania at $212.47 C&F, which compares with their last purchase on 12 June that was priced at shade over $200 C&F. Russia, France and Ukraine all offered, but the list of offers was not (unsurprisingly given current weather concerns) huge.
- The IMF have openly stated that Greece needs both debt extensions and a write down, and if they put forward a “No” vote on Sunday all talks are over. Brussels issued weekly wheat export licences totalling 311,539 mt which brings the season total to 33,163,315 mt, this is 3.517 million mt (11.86%) above last year.
- In the US fund buying was reported to be only moderate as cash selling in S America was active and the US farmer was a slower seller. US crushers are reported to have sufficient cover to around mid August and once they add a further couple of weeks there will be much less aggressive buying around with harvest just around the corner.
- Informa Economics estimated the 2015 US soybean crop at 3,808 million bu, corn at 13,412 million bu and all US winter wheat at 1,477 million bu. Compared to the June WASDE/NASS reports, US estimated corn production is down 176 million bu, US soybean production is down 42 million bu and US winter wheat production down 33 million bu. All combined, this amounts to 251 million bu or 1.3% of estimated US production.
- It appears that everything (US wise) is now about Central US weather going forward and the forecast looks to be improving! As Informa advised yesterday, it is too early to rule out trend or above trend yields in corn or soybeans although we would not expect to see this reflected in next week’s WASE report. Strong inward fund flows in recent days are more linked to technical, chart based patterns than fundamentals – we believe – and the dramatic price rise we have witnessed justifies a substantial US and world cropping decline, which we doubt will materialise. Unless we see a dire Central US weather disruption, our belief is that we are witnessing a “price top” formation and buying into such a rise would, at this time, be unwise. Time will prove us right or wrong – and we hope that it is the former rather than the latter!