David Sheppard, Gleadells managing director,comments on the wheat market:
Agriculture and Agri-Food Canada estimates Canadianall-wheat production for 2014 at 27.71mln t, in line with current projections.
Russiangrain exports reported at 9.9mln t as of 17 Sept, up 26% including 8.6mln t ofwheat, 1mln t of barley.
Russian harvests 90.8mln t of grain as of 22 Sept off75% of total intended area (wheat 54.8mln t bunker weight).
Ukraines grain exports reported at 7.4mln t as of 19Sept, including 4.3mln t of wheat, 2.6mln t of barley.
Ukraineharvests 39.6mln t of grain as of 22 Sept, up 15% year on year total harvestseen at 63mln t.
Ukraines grain stocks reported at 23.4mln t as of 1Sept up 15% year on year.
StrategieGrains raises EU-28 2014/15 soft wheat production to 146.6mln t, up 2.5mln tfrom last month and 10.1mln t year on year.
Strategie Grains raises EU-28 corn production to 71.3mlnt, up 3.1mln t from last month and 7.1mln t year on year.
ArgentineAg ministry projects sharp drop in 2014/15 corn plantings expected area tofall to 5.6m ha (down 8%).
Frosts hurts immature northern US corn, soybean cropsmore than initial estimates.
Egyptsstate buyer GASC purchases 55,000t of US soft red winter wheat for 20-31October shipment.
Another week of markets re-testing bothcontract and multi-year lows, as dry weather is seen speeding up US corn andsoybean harvests. The move to a new low in Chicago has seen some short-coveringenter the market prior to the US quarterly stock report due to be released nextTuesday. The sale to Egypt of 55,000t was, like the French sale the weekbefore, a bargain offer as the price was below replacement. US prices stillremain at a hefty premium over other origins on the export markets.
EU prices (futures) have continued to slideas the MATIF falls to what is, or might be, feed wheat! Reports that 17mln t ofthis years French soft wheat crop is third grade (4.3mln t last year), andthat only 46% of the crop has Hagberg numbers over 220 (99% last year),shows the quality issue facing the French this season. Export silos are full,and EU exports licences, although running in line with last years record pace,are mainly confined to German and Eastern EU origins.
No real change in the UK market this weekwith buyers, when you can find them, purely concentrating on nearbyrequirements. The Scottish no-vote saw the expected rise in sterling, a movethat is deemed negative to UK wheat values.
In summary, everyone is looking for the floorto this market. The world does not have an overall supply issue regardingwheat, but may have a serious quality issue later in the campaign. The recentrise in Black Sea values has resulted in Russia losing its competitiveedge in global export markets, as German and Baltic wheat moves into primeposition, but ones asks the question for how long?
Russian intervention is due to commence nextweek, with talk of 5mln t being purchased. Russia will have to export morewheat, but at current prices buyers will shop elsewhere, therefore furtherprice reductions are needed to encourage buyers. This could be the nextcatalyst for lower global prices.