- We start the week with an update from the European Commission’s Monitoring Agricultural Resources (MARS) Unit which is forecasting 2015 soft wheat yields within the EU at 5.89 mt/ha This is up 0.1 mt/ha month on month and some 3.7% above the five year average. Barley yields were also seen higher from a month ago at 4.71 mt/ha, which is up from 4.63 mt/ha, again an upgrade on the five year average. Rapeseed yields were also higher at 3.35 mt/ha, up from 3.24 mt/ha month on month and almost 7% above the five year average. Favourable conditions were cited as the main reason for yield improvement with temperatures some 2℃ above average as well as soil moisture conditions described as “satisfactory”, although caution was raised over the potential for drying soil moisture levels unless rainfall is forthcoming.
- Grain markets have started the week lower (with an hour to go in Chicago) whilst soybeans have moved into positive territory. Corn and wheat have both touched 2015 lows as soybeans picked up on fresh export demand as well as the unwinding of long corn/short soybean spread trades. The USDA reported the sale of old crop soybeans, suggested to Indonesia who like the colour for tofu production, and it is suggested that these will be rolled to a new crop position – at a discount. China continues to attempt to roll Brazilian cargoes forward as they struggle to deal with their current oversupply position and utilise today’s rally to facilitate this. Any Chinese buying is likely to be from the US for Oct-Nov positions.
- Perhaps of more concern is news that China is checking DDG and barley/sorghum cargoes more carefully for pesticides and residues in what looks like another attempt to shut out foreign grain supplies once again. This fit sin with timing of their own domestic corn auctions which are designed to reduce the huge government stocks. It should not be forgotten that in early May last year China was playing phytosanitary “games” with DDG and corn imports and cargoes using non-approved GM traits as the excuse!
- Strong rumours are circulating that Russia will end their wheat export tariff before 1st July on the back of favourable new crop development, as well as the appointment of a new agri minister. It has been suggested that a decision could be made by mid-May, and there is much lobbying by international grain traders based upon what is perceived to be a huge backlog of old crop supply.