The October USDA report, released today has confirmed the significant tightness of the wheat market. But for Soya and Corn, ending stocks, even if low, have surprised the traders on the upside. As a consequence, wheat prices are strongly up again tonight, while corn, soya and OSR prices are trading significantly down.
Despite ongoing tight fundamentals, MATIF OSR prices have lost €33 (5%) from last Friday's peak at €683. Traders are considering taking some profits before tonight's USDA report. This sudden drop was motivated by lower palm oil exports, improving conditions in Brazil and the perspective for a higher soya production in the US. In ODA we consider current prices, especially for new crop, as an excellent opportunity to start fixing some volumes. Be prepared to act soon.
The United Kingdom's wheat harvest this year is provisionally forecast at 14.02 MT, up 45.2% from the previous season. The rise was driven partly by a sharp rise in area following more favourable planting conditions. This estimate is slightly lower than ODA's figure. We still see it at 14.5 MT. Barley crop is seen at 7.11 million tonnes, down 12.4%. Markets reacted positively to these lower than expected figures with LIFFE up £1 when MATIF is down €1.5.
Due to dry weather and unfavorable domestic context (export tax), Russian farmers have planted less winter wheat this fall than expected. Winter wheat usually accounts for 70% of Russia's crop. Farmers had sown winter grains on 10.8 million hectares as of Sept 30, down from 12.3 million hectares at the same date a year ago, according to the agriculture ministry. This lower acreage could impact the 2022/23 production by 4Mt. Bullish new crop wheat.
In their September stocks report, USDA officials estimate US 🇺🇸 stocks of corn at 1.24Bn bu and soybeans at 0.26Bn bu, larger than the market had been expecting. For wheat, stocks are seen at 1.78Bn bu, well below expectations and sharply lower than Sept 2020. Market reaction was swift, with wheat CBOT futures climbing a further 13c/bu, soybeans down 21c/bu and corn largely unchanged. Some market concern over corn and soy stock levels will be allayed in the weeks ahead, which may prompt more price consolidation. We will keep you informed in a timely manner.
Old crop Gr1 milling premiums have risen further in recent days, with some merchants (ADM) now bidding £40/t for full spec samples. ODA has held £40/t as a trigger point to lock-in the premium and so we advise clients with appropriate grades/spec to gather price information from your buyers, with a view to fix 50% of your unpriced premiums. We still believe that premiums could climb higher amid the very tight global milling wheat situation.
While US winter wheat planting is making good progress at 34% complete, in-line with the five-year average – crop conditions and emergence may underperform the five-year average this autumn and put the crops at higher risk of deteriorating this winter. The dry pattern is seen to last until December. As a result, CBOT prices are moving higher, supporting our prices.
Recent rains have allowed corn plantings to start earlier than last season, which suffered historical delays. But the situation requires monitoring closely, as soil moisture is as low as it has ever been and La Nina is potentially looming (hot/dry). The record crop expectations in the latest USDA crop report will require ongoing precipitation to materialise. So, ‘risk’ is off in the very short-term time-frame, but remains firmly ‘on’ in a longer-term perspective. As a result, a strong weather market will remain in place, as will price volatility.
After having reached record levels once again this week, oilseeds and grain prices dropped significantly. Is this sudden return of volatility a sign that season’s highs may have been achieved?Read more
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|t-ice||WHEAT||Nov '21||207.50||207.50||0.50||208.00||208.50||207.00||185||1078||ICE||10/19/21||14:43:36||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '22||206.90y||206.90||y||20||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Mar '22||210.20y||210.20||y||58||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '22||215.50||215.50||0.60||215.00||216.50||214.50||261||6910||ICE||10/19/21||14:58:09||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jul '22||206.45y||206.45||y||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '22||192.00||192.00||0.00||193.00||193.00||192.00||25||2760||ICE||10/19/21||14:30:43||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '23||189.95y||189.95||y||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Mar '23||187.20y||187.20||y||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '23||184.90y||184.90||y||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '23||181.80y||181.80||y||19||ICE||10/18/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
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