9 January 2013

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  • Last night’s closing action in Chicago did provide some huge volume of trade as anticipated but despite that prices moved very little. Markets continue to trade in guarded fashion ahead of Friday’s key report which is likely to provide fireworks, the direction of these fireworks is less than certain at this time!
  • We have seen some evidence of Chinese activity in the wheat market as they source better protein supplies from the US and Canada to bolster their own stocks amidst record domestic prices. It appears there is potential for some significant volume of imports by China if prices continue to remain depressed. Quality of the crop is also rumoured to be questionable, which would add credence to the requirement for higher quality wheats. It may not be generally reported, but China is suffering the coldest winter in 30 years, which is even affecting crops in the south.
  • Conversely, the US climatologists reported that 2012 was the second warmest summer ever recorded. This comes as little surprise after all we have seen and reported over the last six or seven months although it is nice to have “official” confirmation, albeit after the event! The big question will be whether the drought will continue, some fear that the temperature trends in the two key oceans, Pacific and Atlantic, look to provide a repetition of the 2012 patterns. Only time will tell, but a second dry season in the US is the last thing global grain stocks need right now.
  • France’s AgriMer reported their 2012 wheat output at 35.815 million mt, which is a little over 5% above the 2011 figure. At the same time they reported end stocks up over 300,000 mt at 2.293 million mt. Both corn and barley end stocks were also seen as higher than 2011 levels.
  • Ukraine’s 2013 wheat crop is reported at 19 million mt by their AgMin and at 21 million mt by AgroConsult. Corn and barley output is also seen as increased in 2013. We see little in the way of surprise in these latest figures given last year’s crop stresses and the figures appear attainable provided the weather does not intervene as it did last year.