- Trading to start the week has been pretty uninspiring as far as volumes are concerned, the highlight being the return of London wheat markets to their Feb ’14 lows (Nov ’14 traded £142.00) where some support was found. Paris also traded lower but the moves in exchange have ensured that the lows are still some way off – for now. The outlook for EU wheat crops, and Black Sea for that matter, still looks good, and the potential for imported corn to displace wheat in feed rations for another season still exists. If that becomes the case, growers will need to reconsider their position as far as price expectations are concerned, and lower price levels in order to compete with the alternate grain.
- There is talk of hot and dry conditions in the Volga region of Russia, which has resulted in some trimming of wheat output forecasts, and this is the first sign this season (so far) of any such threat to crops through less than ideal weather. The trade expectation of Russian wheat output sits in the range of 49 to 52 million mt vs. 52 million mt last season. Some relief in Russia is contained in the latest forecasts with up to 2” of rain projected to fall across the coming fortnight. Russia’s spring wheat belt is adequately wet.
- Our view remains that longer term price trends remain bearish in the absence of a significant weather issue, the Volga “threat” will need to grow and expand its geographical coverage before any major spec buying is triggered.
- The expectation for US plantings data, due to be released later today, is that corn will reach 94%, soybeans 76% and spring wheat 86%. Initial ratings for good/excellent corn is expected to be 71%, which compares with 63% last season.
- Finally, the Ukraine AgMin has put 2013/14 grain exports so far at 31.4 million mt, which is an increase of 43.2% year on year.