Gleadell Market Report
GRAIN MARKETS – David Sheppard, managing director
WHEAT
Kazakhstan has lowered its exportable grain surplus by 14% to 6mln/t this season, in an effort to create extra stock to battle rising inflation and higher internal food prices.
Ukraines grain stock as of March 1st totalled 12.4mln/t – 5.3mln/t wheat, 1.6mln/t barley and 4.6mln/t of maize – down 3% from the same date in 2010. Spring sowings have started in southern regions, delayed by cold weather. Officials report that farmers are likely to sow 15mln hectares to grains this year, the same as in 2010.
SovEcon sees Russian 2011 grain crop at 75-85mln/t, up from 60.9mln/t in 2010. The winter grain crop forecast has been cut to 36.2mln/t from 38mln/t with the key spring grain area in Siberia and the Urals rising year-on-year. However, this is sharply lower than the crop estimate released recently by the deputy prime minister. Last year has taught us that we may have to wait until July to gain a firm handle on crop size.
Spains grain trade reports stocks are unusually low and the country will need a wave of imports to meet demand until new crop is available in July.
German agricultural association DRV sees the countrys 2011 grain harvest rising slightly to around 44.2mln/t. Potential yields have been limited by difficult sowing conditions in the autumn, the early onset of winter and frosts in early March. The association estimates the wheat crop at 24.7mln/t, against 24.1mln/t last year.
Ag Canada sees the 2011 global wheat crop at 670mln/t, mostly due to better crop prospects in the Black sea region that was hit by severe drought last summer. The IGC are also currently running with an estimate of 670mln/t for 2011.
DEFRA cut UK 2010/11 closing wheat stocks to 1.6mln/t on improved export numbers. However, their current export projection (2.105mln/t) has been set at the cumulative end-JAN figure. We anticipate the full year exports to reach 2.5 to 2.7 mln/t.
Following last weeks roller-coaster ride, the market has drifted slightly from the highs witnessed at the end of last week. Supplies remain tight and, with US corn plantings only recently started amidst unfavourable weather conditions, markets will remain twitchy. Wheat prospects remain good, although there are enough weather problems to keep the bulls happy.
In summary – Tsunamis, nuclear plant problems and wars in North Africa are factors that will influence commodity price direction but are also completely unpredictable. On the fundamental side of markets, big crops are projected for 2011 – the World needs them – and any weather/production issue that threatens the supply side will attract speculative buying interest.
After the turmoil in the markets of 10 days ago we have seen rapeseed prices rebound sharply in recent days. With the increased levels of volatility we now see in the markets, these big price moves are becoming more frequent and at times can make the markets a dangerous place to be.
The 40 drop we saw in prices last week was largely sparked by the investment funds liquidating positions following the Japanese earthquake and the subsequent uncertainty that followed. The drop that followed got overdone as stop losses and automated electronic sell orders undermined the market. However, this week saw a ‘V’ shaped recovery that has almost taken prices back to where they have come from – again just highlighting how difficult the market can be, and how growers would be well advised to lock into profits when they are there to be taken. The pace and ferocity of market moves can change farmers’ potential earnings in a matter of minutes!
GRAIN market information contact David Sheppard, managing director, on 01427 421222 david.sheppard@gleadell.co.uk
OILSEED market information contact Jonathan Lane, trading manager, on 01427 421222 jonathan.lane@gleadell.co.uk
1. Gleadell Agriculture currently has offices in Full Sutton (Yorkshire), Hemswell (Lincolnshire), Swaffham (Norfolk), Lyndon (Rutland), Warminster (Wiltshire) and Bilsborrow (Lancashire).
2. Gleadell Agriculture Ltd is equally owned by Toepfer International – based in Hamburg, who trade in all agricultural products globally; and InVivo – based in Paris, who trade agricultural products on the international markets and operate major grain storage and handling facilities.
3. Prices quoted are indicative only at the time of going to press and subject to location and quality.
4. Gleadell Agriculture cannot accept liability arising from errors or omissions in this publication.
5. mln/t = million tonnes, mt = metric tonnes, kg/hl = kilogram per hectolitre, k/mt = thousand tonnes.