Frontier Agriculture
Member
World Markets
Chicago closed lower yesterday following an improved weather outlook which took wheat lower despite a weak US dollar. Reports of better snow cover in the Plains eased concerns ahead of a forecasted temperature drop next week. Drought conditions are still expanding in the south and west Plains. This is not seen as a major concern unless it continues into spring when crops break dormancy and will be in most need of good moisture to resume growth. US funds continue to extend their short positions.
In Argentina, the wheat harvest is finished and the final yield average is 3.2t/ha, up 7% on the five year average. This gives a final crop number of 17mmt versus the USDA estimate of 17.5mmt. Weather watchers will be more focused on corn for the next few weeks and the La Nina weather pattern is predicted to continue into the spring keeping the risk of dry conditions for South America on the radar.
Matif wheat closed lower yesterday as the euro made its highest close versus the US dollar since December 2014. EU exports continue to be very slow and are not competing with aggressive prices from Russia, despite a stronger Russian ruble pushing up Russian export values. Egypt is one of the biggest demand points consuming about 800,000mt of wheat per month and Russia has been dominating this market. Egypt’s Ministry has said that they have 3mmt of wheat in strategic reserves, enough to last until early May.
UK Wheat
London wheat continues to slip lower; yesterday, May 18 closed down £0.75/t at £139.00/t making a fresh 12 month low. Charts have shown a support line keeping wheat range-bound as it has been for some time, but a drop below £140/t broke this chart support on Monday. Sterling has been firming and is back to levels versus the US dollar last seen in June 2016.
Domestic demand for feed grains is good but Vivergo remains shut and with no indication of when this large ethanol plant might come back online pressure is building for old crop wheat. if the UK is going to export its surplus then prices will first need to come down to compete into export markets.
Chicago closed lower yesterday following an improved weather outlook which took wheat lower despite a weak US dollar. Reports of better snow cover in the Plains eased concerns ahead of a forecasted temperature drop next week. Drought conditions are still expanding in the south and west Plains. This is not seen as a major concern unless it continues into spring when crops break dormancy and will be in most need of good moisture to resume growth. US funds continue to extend their short positions.
In Argentina, the wheat harvest is finished and the final yield average is 3.2t/ha, up 7% on the five year average. This gives a final crop number of 17mmt versus the USDA estimate of 17.5mmt. Weather watchers will be more focused on corn for the next few weeks and the La Nina weather pattern is predicted to continue into the spring keeping the risk of dry conditions for South America on the radar.
Matif wheat closed lower yesterday as the euro made its highest close versus the US dollar since December 2014. EU exports continue to be very slow and are not competing with aggressive prices from Russia, despite a stronger Russian ruble pushing up Russian export values. Egypt is one of the biggest demand points consuming about 800,000mt of wheat per month and Russia has been dominating this market. Egypt’s Ministry has said that they have 3mmt of wheat in strategic reserves, enough to last until early May.
UK Wheat
London wheat continues to slip lower; yesterday, May 18 closed down £0.75/t at £139.00/t making a fresh 12 month low. Charts have shown a support line keeping wheat range-bound as it has been for some time, but a drop below £140/t broke this chart support on Monday. Sterling has been firming and is back to levels versus the US dollar last seen in June 2016.
Domestic demand for feed grains is good but Vivergo remains shut and with no indication of when this large ethanol plant might come back online pressure is building for old crop wheat. if the UK is going to export its surplus then prices will first need to come down to compete into export markets.