Gleadell Grains & Oilseeds Market Report
Gleadell Agriculture currently has offices in Full Sutton (Yorkshire), Hemswell (Lincolnshire), Swaffham (Norfolk), Lyndon (Rutland), Warminster (Wiltshire) and Skelmersdale (Lancashire). mln t = million tonnes, mt = metric tonnes, kg/hl = kilogram per hectolitre, k/mt = thousand tonnes.
GRAIN MARKETS – Jonathan Lane, Trading Manager
WHEAT
> IGC sees record 2012/13 global corn crop, stocks up – global wheat stocks viewed as comfortable despite small drop.
> USDA planting survey reveals 2012 US corn acreage at 95.9mln acres, the highest since 1937.
> Russian AgMin expects to end season with closing stocks of 18mln t of grain after exports and 2mln t of intervention sales.
> Kazakhstan’s grain exports reported at 7.8mln a/o April 1st, export potential of 15mln t in the marketing year.
> Coceral projects 2% fall in EU-27 2012/13 soft wheat production to 126.76mln t – affected by frost damage.
> USDA March 1st stocks report estimates lower than expected corn and wheat stocks – perceived tightening of balance sheet.
> Morocco’s 2012 cereal crop may fall to as low as 3mln t due to the effects of drought, against last season’s 8.4mln t.
> Saudi Arabian 2012 wheat output seen down 9% to 1mln t – 2012/13 wheat imports expected at 2.5mln t due to increased demand.
Summary
The planting survey issued by the USDA last Friday projected corn acreage higher, but soybeans and wheat (spring) below market expectations. Corn acreage, at 95.9mln acres, would be the highest since 1937, although analysts believe that the recent price move in favour of soybeans may lead to a switching of up to 1mln acres from corn to soybeans.
Quarterly stocks reports also surprised the trade, as previous bearish reports were replaced by a bullish report. Stocks of corn and wheat were lower than trade expectations, pointing to stronger domestic use and, therefore, a tighter balance sheet. The USDA will factor these reductions into the supply and demand reports, due to be released Tuesday 10th April.
In summary, with lower US stocks and crop estimates still declining for South American corn and soybeans, these should keep the old crop future positions underpinned. New crop prospects remain favourable in the US with winter wheat crop ratings improving, and higher than expected corn acreage/production that should alleviate supply issues for 2012/13.
In the EU, recent rains – which should relieve thirsty crops – will help to pressure prices, although in parts of France and Spain, more moisture is required to ease damage concerns. With the US corn planting campaign due to ‘ramp-up’ in the next few weeks, weather will play an increasing importance on future price movement, as any potential ‘crop threatening’ issues will entice strong buying interest.
OILSEED MARKETS – Willie Wright, Oilseed Trader
> The rapeseed market is in a very difficult and complex situation. Crushers who once enjoyed fantastic crush margins on the back on bio-diesel demand are now struggling to meet costs and, in some cases, are shutting plants.
> Given this backdrop it seems pretty amazing that rapeseed values in Europe have reached these current dizzy heights. But the market isn’t trading crush margins, nor is it particularly trading the fundamentals of its own supply and demand forecasts – rather the market is focused on the global oilseeds complex and, more importantly, the US soy market.
> In the last USDA report, the market was surprised by the sharply lower predictions for soybean plantings in the US and the tight old crop ending stocks.
> In Europe, the old crop market on the Matif has reached a contract high of 502.25 but in theory should come under pressure due to falling crush demand, the arrival of now unwanted Australian canola, and the prospect of higher than expected end of season stocks.
> The new crop market has been focused on the deteriorating production outlook with winterkill affecting large areas of Eastern Europe. This, combined with a cut in winter plantings, will see European production only reach a disappointing 19.5mln t, well down on the 21.7mln t crop seen in 2010.
Summary
When we consider the outlook for rapeseed consumption in the EU, we could paint a bearish picture. But the technical indicators in the futures market would still suggest there is the potential for higher prices in the medium term and, as long as the bull story remains in place for US soybeans, the European rapeseed market should continue to find some support.
