Frontier Agriculture
Member
World markets
US wheat futures fell to contract lows last week although they did manage to close slightly up from the lows on Friday. The weight of the large global wheat harvest weighed on values, particularly in light of poor US export sales which are running 9% behind last year’s pace. Dry conditions across the US plains remain a watch point. There has been some rain forecast but a large area of the plains will remain dry, allowing drought conditions to expand. Last week crop ratings dropped for the third consecutive week, down 2 points to 50% ‘good to excellent’, versus 58% at the same point last year.
There has been more heavy rain in Australia over the weekend. Although rains are forecast to ease this week it will still be wet enough to cause problems combining. The quality of the wheat crop is likely to be affected to some extent following this prolonged wet period. In contrast, weather conditions in South America are dry. Yields are still running below expectations at 2.22t/ha but quality is reported to be acceptable and harvest sits at 31.5% complete.
Matif wheat also hit contract lows last week following the negative tone of US markets. There was a revision to the total output of the EU wheat crop which was raised by a further 1 million mt to 142.5 million mt. Exports are still substantially behind the USDA’s projected numbers and remain 22% down on last season.
UK market
London wheat closed slightly lower over the week with May 18 losing £0.25/t to close at £142.50/t.
The AHDB released the results of a final quality survey for this season which showed just 24% of Group 1 varieties met high quality milling specification. This is the lowest pass rate since 2014 and corresponds with the firming of milling wheat premiums to offer a better return for those with full spec milling wheat to market.
Defra has released the first official supply and demand data for the season. The key differences from last year are the significantly reduced carry-in, as well as reduced imports. These two factors add up to a reduced exportable surplus which came in at 1 million mt, 30 % lower than last year. However, although the surplus is reduced, we are in a different market to last season and shipping a million mt out of the UK is a tall order at the moment. This is in light of very low export numbers to date and current pricing which puts the UK circa £6/t too expensive versus other competing origins.
US wheat futures fell to contract lows last week although they did manage to close slightly up from the lows on Friday. The weight of the large global wheat harvest weighed on values, particularly in light of poor US export sales which are running 9% behind last year’s pace. Dry conditions across the US plains remain a watch point. There has been some rain forecast but a large area of the plains will remain dry, allowing drought conditions to expand. Last week crop ratings dropped for the third consecutive week, down 2 points to 50% ‘good to excellent’, versus 58% at the same point last year.
There has been more heavy rain in Australia over the weekend. Although rains are forecast to ease this week it will still be wet enough to cause problems combining. The quality of the wheat crop is likely to be affected to some extent following this prolonged wet period. In contrast, weather conditions in South America are dry. Yields are still running below expectations at 2.22t/ha but quality is reported to be acceptable and harvest sits at 31.5% complete.
Matif wheat also hit contract lows last week following the negative tone of US markets. There was a revision to the total output of the EU wheat crop which was raised by a further 1 million mt to 142.5 million mt. Exports are still substantially behind the USDA’s projected numbers and remain 22% down on last season.
UK market
London wheat closed slightly lower over the week with May 18 losing £0.25/t to close at £142.50/t.
The AHDB released the results of a final quality survey for this season which showed just 24% of Group 1 varieties met high quality milling specification. This is the lowest pass rate since 2014 and corresponds with the firming of milling wheat premiums to offer a better return for those with full spec milling wheat to market.
Defra has released the first official supply and demand data for the season. The key differences from last year are the significantly reduced carry-in, as well as reduced imports. These two factors add up to a reduced exportable surplus which came in at 1 million mt, 30 % lower than last year. However, although the surplus is reduced, we are in a different market to last season and shipping a million mt out of the UK is a tall order at the moment. This is in light of very low export numbers to date and current pricing which puts the UK circa £6/t too expensive versus other competing origins.