Despite very dry early growing conditions and low recent temperatures (which is normal), crop conditions across the B-Sea region have improved of late. We were seeing 2021 Russian 🇷🇺 wheat production at 76Mt (86Mt in 2020). However, even though widespread ‘ice-crust’ risks prevail, current forecasts suggest an early start to spring in the week ahead, bringing warmer and crop-yield-friendly conditions into play. We will monitor conditions here closely, as the Black Sea 🇷🇺 🇺🇦 region will still likely remain a key price benchmark for the 2021/22 season. At this stage, it would not surprise if Russia added 3-4Mt to earlier wheat output forecasts, should spring and summer conditions be amenable.
Despite very dry early growing conditions and low recent temperatures (which is normal), crop conditions across the B-Sea region have improved of late. We were seeing 2021 Russian 🇷🇺 wheat production at 76Mt (86Mt in 2020). However, even though widespread ‘ice-crust’ risks prevail, current forecasts suggest an early start to spring in the week ahead, bringing warmer and crop-yield-friendly conditions into play. We will monitor conditions here closely, as the Black Sea 🇷🇺 🇺🇦 region will still likely remain a key price benchmark for the 2021/22 season. At this stage, it would not surprise if Russia added 3-4Mt to earlier wheat output forecasts, should spring and summer
Latest intelligence suggests the fresh outburst of African Swine Fever (ASF) in China 🇨🇳 has dramatically escalated. Information from local producers (in industrial units) suggest around 6.2M head have been lost in the Jan-Feb period alone, with live hog output estimated to have fallen by 15-20%. This forces analysts to question China’s demand for grains in the months ahead. Accurate information is scarce and uncorroborated. We will update clients in the days ahead, as substantiated details are made available to us and as we weigh-up the consequences to global cereal and protein (soybean) demand. The impact on world prices is not significant yet, with CBOT corn down 4% in the week. Domestic Chinese corn price remains highly elevated when compared to international prices.
Following good conditions in January, corn and soya areas have faced one of the driest Februaries in history. The 2nd corn and late soya crops are now entering their flowering stages and crops could well deteriorate rather than improve at a time when the world needs plentiful production more than ever to cope with the strong and ongoing Chinese 🇨🇳 demand.
Ongoing rain keeps on affecting field operations in Brazil 🇧🇷. The soya crop is not under question, it should reach 134Mt as predicted. It will, however be harvested later and thus it is directly impacting the Safrinha (2nd corn crop) operations, which account for 60% of their national production. With only 40% of the corn in the ground vs 75% last year, a large portion of the crop will be planted out of the ideal window. Thus, it will be much more exposed to the traditional dry April and May weather. The 110Mt production forecast is clearly at risk and weather conditions will be monitored very closely by the market during the next 3 months!
Heading into the weekend, global 🌎 markets are a sea of red. The main triggers for the sell-off are ideas that global demand for US 🇺🇸 supplies has softened, evidenced by weak US weekly export sales data and souring risk sentiment in financial markets. Soybean exports from Brazil 🇧🇷 have now started to flow at pace (to China 🇨🇳), as their harvest come on-stream, alleviating some market stresses witnessed recently. Additionally, a stronger US dollar is weighing on global agric prices. UK 🇬🇧 wheat futures have not been immune, although our declines are less severe, due to tightening local considerations (Vivergo) and a weaker pound. Currently, we consider this price drop as short-term and does not change our overall supportive view for global ag markets ahead.
News from AB Sugar that they intend to re-open their vast ethanol plant in Humberside in early 2022 could have significant implications for the domestic wheat balance sheet. In previous years, the plant consumed 1Mt. It was thought the UK would be a marginal net exporter in 2021/22, but this news could switch the UK firmly back into being a net wheat importer, with potentially an extra 500Kt wheat demand. Much depends on the type of crop they will use and how much capacity they employ, but if it is domestic-sourced wheat, it becomes more likely we will need larger imports. In turn, UK wheat prices would again need to trade above Continental 🇪🇺 prices. Currently, we are trading £5/t below (MATIF). LIFFE Nov21 up +£3 on the news!!
In their second official estimates for the UK 🇬🇧 2020/21 balance sheets, officials see production number of 9.7Mt, from 10.1Mt in October. UK wheat usage in animal feed was cut by over 700Kt from November, to 5.9Mt, but this was compensated for by an increase barley usage, now put at 5.3Mt. Maize imports were raised to 2.9Mt (2.7Mt in Nov). The numbers confirm that, due to huge price differences between crops that have developed this season, feed consumers have switched between various crops, looking to maximise their cost/benefits. This includes sourcing cheaper grain supplies from offshore. The updated numbers were largely expected by the market. We consider these figures are neutral for wheat and supportive for barley.
It is a fact that, following 7 years of relatively low prices and volatility, ag. markets are now moving higher led by both short and long-term fundamental changes. The short-term considerations are now known: lower production and higher demand has taken world ending stocks to dangerous levels for our three major commodities, wheat, corn and soya. Furthermore, production risks are still ongoing in many key regions: Brazil, Argentina, US, Russia. All correlated to weather concerns...Read more
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|t-ice||WHEAT||Mar '21||205.85s||205.85||s||-0.25||205.85||205.85||205.85||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '21||205.50s||205.50||s||-0.25||205.50||206.00||204.00||591||3814||ICE||03/04/21||13:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jul '21||205.90s||205.90||s||-0.15||205.90||205.90||205.90||42||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '21||170.50s||170.50||s||0.00||170.00||170.75||169.00||284||7469||ICE||03/04/21||13:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '22||172.55s||172.55||s||0.10||172.55||172.55||172.55||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Mar '22||174.40s||174.40||s||0.20||174.40||174.40||174.40||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '22||175.30s||175.30||s||0.30||175.30||175.30||175.30||524||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jul '22||174.80s||174.80||s||1.80||174.80||174.80||174.80||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '22||162.80s||162.80||s||3.30||161.00||161.50||161.00||8||169||ICE||03/04/21||13:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '23||165.55s||165.55||s||3.30||165.55||165.55||165.55||ICE||03/04/21||17:36:03||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
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