- European markets have traded cautiously higher today as the US markets close in observance of their Independence Day holiday. London’s LIFFE wheat futures continued higher by a modest £0.10/mt continuing the seemingly relentless push and marking a £Stg adjusted premium over Paris’s milling contract in excess of £7.00/mt basis March and May 2019 contracts (the first directly comparable months). This premium, for a feed grade contract, marks the potential tight UK balance sheet position, not only in the current position but also as an outlook into the new crop marketing year.
- November ’18 London wheat closed at contract highs (£169.15/mt), which is almost £18/mt above values a mere 12 months ago. Recent cuts in EU output forecasts have contributed to further sharp price hikes in recent days; continued stresses from hot and dry conditions have the potential to further cut output from current forecast levels. 2018 EU soft wheat output estimates were cut 2.6 million mt from May estimates with a similar 2.6 million mt cut in barley production. Overall EU wheat output is put at the lowest level since 2013 when output was 136.2 million mt; UK output was maintained at 14.3 million. Cuts in output are (unsurprisingly) expected to translate directly into reduced end stocks.
- Stratégie Grains cut their estimate of French output following a crop tour and the IGC’s latest global grains output figure was also reduced by a sharp 12 million mt from their May estimate. Adverse weather in Russia and UK were particularly highlighted. Global grain output was pegged at a three year low.