Gleadell Market Update
FEED WHEAT by David Sheppard. Telephone 01427 421222 or emaildavid.sheppard@gleadell.co.uk
The UK wheat futures market has moved lower this week following last weeks gains. However, due to farmer retention – not only across the UK but all around Europe – and the weaker /, spot levels remain supported, says David Sheppard, managing director, Gleadell Agriculture.
Egypts state grain buying agency, the GASC, purchased 90,000mt of Russian wheat, 180,000 tonnes of French and 60,000mt of US soft red wheat in their tender yesterday, for early October shipment at levels below replacement.
Harvest is now complete in many parts of the UK but with significant areas still left to combine north of the Humber and Scotland. Crop estimates now hovering around the 15mln/t mark, leaving the exportable surplus in excess of 3mln/t.
World wheat production estimates continue to grow, with the International Grain Council now forecasting the world wheat crop at 662mln/t, an increase of 8mln/t since their last estimate. They also estimated wheat stocks to increase by 9mln/t to 183mln/t.
The fundamentals of the market still remain the same, there are abundant world wheat stocks and with limited export interest. Due to the UK still remaining outpriced by cheaper offers of Danish origin wheat, the UK is facing a large exportable surplus with nowhere to go.
Farmer retention is likely to continue in the UK. However, with the fundamentals unchanged, the wheat will have to come to the market at some stage, and this could see a significant drop in the market, therefore any rallies continue to be a selling opportunity.
Export interest for UK wheat is at low levels and most UK port silos and stores are full, with few ships expected in the next few weeks, Mr. Sheppard adds.
OILSEED RAPE by Jonathan Lane. Telephone 01427 421222 or emailjonathan.lane@gleadell.co.uk
US soy prices rallied 11% last week, but we have seen the market give back nearly all of these gains since Monday. The soy complex got sold off following improving weather forecasts in the US, sagging economic sentiment and unconfirmed reports that state-owned Chinese firms may be getting ready to default on over-the-counter hedging contracts with 6 foreign banks,says Jonathan Lane, Gleadell oilseed rape trader.
However, the overall market direction is still not clear. North east China has experienced a prolonged period of heat and dry weather that is forecast to result in yield losses of up to 30%. With no access to South American beans until the next spring the US is expected to see a huge amount of buying demand in the first half of the new crop season.
In Europe, the market has lost 10 since Monday as spillover pressure from the lower soy complex and the sharp fall in crude oil combined to take prices lower. However, it is difficult to see European rapeseed prices remaining at these low levels. EU origin rapeseed is the cheapest in the world so third country imports will not calculate.
The import ban on US soybeans due to the tightening of EU regulations on GMO feed materials will see a sharp increase in rapeseed processing, and with rapeseed oil now calculating in to B100 bio-diesel the expectation for a lift in prices remains,Mr Lane adds.