- The European markets have seen little in the way of excitement as holidays get in front of day to day activities, the Paris May ’13 contract approaches expiry and buyers retreat hoping that their purchases will see them throughout to the new crop and its inevitable price reductions.
- We therefore look, as ever, to the US for news and information upon which prices will take direction; the weekly crop progress report did little to add comfort as the winter wheat data continues to present a gloomy picture. Poor/very poor rating accounts for 39%, a rise from 35% a week ago, whilst good/excellent stands at 32%, down from 33% last week. Spring wheat plantings stand at 23%, up from 12% last week but behind the 5 year average of 50%. Corn plantings, whilst better than last week at 12% (last week 5%) are behind the 5 year average of 47%. Soybean plantings are just scratching the surface with 2% in the ground compared with the five year average of 12%. All in all, the US weather has conspired to give us an unattractive overview of the coming season; however we MUST remember that nature has an impressive ability to compensate and it seems markets are taking this into account right now.
- Ukraine’s soil moisture levels are starting to raise concern as the dry conditions have left topsoils drier than desirable. Planting of spring wheat is reported to be significantly behind last year and winter planted crops are showing signs of a decline in condition. The latest crop estimates from ArgroConsult and ProAgro are around 2 million mt behind the USDA’s latest forecast. To add to the concern it is also reported that temperatures are rising creating additional drying to topsoils; the forecast for the next week shows little immediate relief.
- Canadian wheat output may well come under pressure as their planned record acreage of spring wheat is delayed as a result of frozen soils and heavy snow melt.
- In Australia the lack of spring rains in NSW, described as ether “below average” or “very much below average” has delayed sowings of wheat.
- Despite what might feel like bullish news, the general feeling we have is that (new crop) price rallies are being viewed as opportunities to sell, and therefore gains are being limited. The key to exploiting this to full advantage from a consumer perspective is to anticipate the arrival of plentiful new crop supplies and have little in the way of expensive old crop stocks. Maybe this is a statement of the obvious, but sometimes it is worth making such statements particularly when the old vs. new crop price differentials are wide.