- Weekend roundup.
- The week has, once again, been something of a less than spectacular one in terms of truly fresh information and we have been re-hashing old stories.
- The Russian 5% duty story would appear to be now factual, but with a twist! The time delay necessary to ensure due legislative process will probably mean it is not in force until April, and then only likely to be applicable until end June, a full three months! Rumours have circulated (unconfirmed) of soft red wheat trading into St Petersburg adding to the sentiment that Russia will be an importer and the commonly held view is that their requirement will be in excess of 2 million mt. With the exception of Kazakhstan, who may be in a position to supply up to 1 million mt, the likely source of supplies points to the US right now.
- In a similar vein, it is widely believed that a cargo of soft red wheat is to be shipped to the UK in March, which, if true, will be the first in some 20 or so years. The ultimate destination, whilst not known, is thought to be the UK milling industry, which stacks up from a logical perspective given the tightness of UK wheat supplies, particularly quality grains. The value in US wheat is certainly clear, and was again highlighted last weekend when one particularly cheap offer was made in response to Egypt’s latest tender in which they purchased the said “cheap” 60,000 mt parcel and nothing else. Noticeable was the absence of offers from alternative origins, with the exception of one expensive French offer.
- Our thoughts that the traditional exporters of wheat are running on tight stocks would seem to gain some credibility based upon the latest foray by Egypt into the market. However, we continue to find it somewhat odd that prices are not rallying in response.
- S American weather continues to be of interest, the latest episode in the news being the amount of rainfall in the key soybean producing state of Mato Grosso. Fungal disease levels are reported to be high, particularly rust, which although treatable with fungicides at a cost, does have a negative impact upon overall yield. That said Conab this week left little doubt that they were anticipating a good season. Their estimate of soybean output was raised to 83.4 million mt as a result of increased acres (27.6 million), this was an increase of 0.8 million mt from their January estimate. They also estimated corn output with an upbeat 76 million mt, 3.8 million mt above January’s estimate. The only caveat to this number has to be weather; the current rainfall, which is delaying harvest in Mato Grosso, has the potential to delay or even prevent planting of the follow-on or safrhina corn crop. Either event will impact final output.
- In contrast, the Argentine conditions continue with above average temperatures and below average precipitation adding to crop stresses. Crop forecaster, Lanworth, cut their estimate of soybean output to 51.6 million mt from 53.1 million mt and corn was also cut 0.5 million mt to 25.1 million mt. The firm cited the on-going dry conditions as a major factor in their changed forecast. The USDA cut their forecast on Friday in their February WASDE Crop Report by 1 million mt from 54 million mt to 53 million mt but this change was offset by a equal boost to Brazil’s estimated production, up from 82.5 million mt to 83.5 million mt.
- Brussels granted a further 443,000 mt wheat export licences bringing the season to date total to 12.97 million mt, compared with last year’s 10.278 million mt. That is a full 2.692 million mt ahead of last year (26.2%). In the light of everything, Russian, Argentina, Black Sea, Brazil, EU (is there much left?) we sometimes wonder if it is us, or the rest of the world, that is going mad!
- Finally, in the UK we are seeing grain being moved longer distances as some northwestern destinations are taking delivery of wheat