- Today saw the return of Egypt’s GASC (General Authority for Supply Commodities) to the tender market, the first since President Mohamed Mursi was ousted earlier this month. They purchased a total of 300,000 mt for late August shipment, 120,000 each from Romania and Russia and 60,000 from Ukraine. Prices appear to have been aggressive, but that is what we tend to see, certainly from Russia and Ukraine in early season sales.
- Today, Stratégie Grains increased its forecast for 2013/14 EU wheat output based upon improved weather conditions across much of the region. The crop, which is the world’s largest, was increased to 133.4 million mt from 131.5 million mt a month ago, and this compares with 125.5 million mt last season. This figure, if achieved, will be the third highest and a five year high. However, exports were also forecast higher, by 4.6 million mt to 22.3 million mt (from a month ago), which is 2.8 million mt higher than last year. The net effect is to see end stocks virtually unchanged year on year at 11.4 million mt, but lower than the 14.2 million mt predicted a month ago.
- EU barley production was also forecast higher at 57.3 million mt (compared with 56.1 million mt a month ago), which is 2.6 million mt higher than last year’s output of 54.7 million mt. Despite a marginal increase in forecast exports from the EU, end stock is forecast to grow by 1.4 million mt compared with last year.
- The EU corn S&D is somewhat less changed (month on month) with an increased carry in figure and production reduced by 100,000 mt, which is exactly offset by a similar increase in imports. The net effect is that forecast end stocks are to increase by 700,000 mt year on year.
- In the weather dominated US markets prices closed lower but above the lows of the day. Wheat was the laggard, awaiting the outcome of the Egyptian tender as well as news of US export data. Corn and soybean oil exports were reported above expectation, whilst wheat, soybeans and soybean meal were all within trade estimates.
- Forecasts for the US crop producing area weather are all (currently) generally favourable with nothing in the way of excessive heat and some precipitation extending into the middle of next week. This is resulting in a degree of weather premium being removed from prices, which as we have reported, are declining albeit slowly. The long term outlook into August prepared by NOAA (National Oceanic and Atmospheric Administration), details average temperatures and rainfall across much of the US.
- Brussels granted wheat export licences totalling 327,872 mt this week, which brings the three week old season total to 642,831 mt. This is over 250,000 mt higher than the three week total of last season (67.2%), albeit it is still extremely early in the marketing year.
- Finally, recent rains in Canada look to have improved the canola crop, potentially to record levels according to their farm ministry. Production estimates rose by half a million mt to 14.6 million mt. This level of output is merely 8,000 mt lower than the record output of two years ago. Also assisted by improved weather is the level of wheat output according to Lanworth who increased, by 1.9 million mt, their forecast to 29.8 million mt. They said that temperature, precipitation and soil moisture levels had ranged from average to moderately cool and wet in June and July across the key wheat growing areas of Alberta, Manitoba and Saskatchewan, and described them as favourable.
- In summary, today’s news all appears to lean towards our favoured view, which is cautiously bearish at this time.