Frontier Agriculture
Member
World markets
US wheat started last week with a sharp drop as fears over the rapidly shrinking Chinese economy sparked panic selling in global commodity and equity markets. Although wheat markets recovered from the extreme losses, fundamentals kept the pressure on throughout the week, culminating with the International Grains Council putting world total grain stocks at the highest in 29 years. Yesterday started another week with losses in wheat; the Chicago December contract hit new lows before closing marginally higher on the day.
Favourable weather continues for the US wheat harvest with spring wheat now 88% complete versus 36% this time last year. Exports, however, are 24% behind last year’s pace. Canada has also been dry, allowing harvest to progress there. Australian wheat is at a 4 month low; good rain remains in the forecast and September is the last critical month for the wheat crop, indicating that El Nino will not be an issue for this year’s crop.
Matif closed weaker yesterday. The cargo strike is at an end in Rouen allowing outloading to resume, but the delivery silos are all still closed for intake. EU exports were 325,000mt last week, giving a season total of 3.4mmt vs 4mmt this time last year. Russia was the cheapest offer again in the weekend’s Iraq tender at $231.70/t (£150.80/t). Russia is due to review its export tax and intervention prices on 10th September. Russian exports are well behind last year’s pace due to confusion over tax levels and lack of global demand. The rouble hit new all time lows last week, making for a heftier tax in the US dollar related export tariff currently in place. It is reported that Russian farmers are not selling due to the big discrepancy between export and domestic prices caused by the weak rouble.
UK market
London wheat ended last week at £113.65/t for November, down £1.10/t both on the day and over the week.
OSR market
Stock markets have continued to slide as fears continue over the slowing Chinese economy. In addition, the uncertainty over interest rates on both sides of the Atlantic is weighing on stocks.
There are currently no weather fears anywhere that may cut crop production. The fear of the El Nino in Australia is subsiding rapidly as ample rain continues to fall across all major crop growing regions of the country.
Crude oil rose over 6% yesterday due to a US government report showing crude production down 1% on the month and a bulletin from OPEC expressing the group's concern over the low price of oil. However, OPEC also stated that there is ‘no quick fix’ for low oil prices as Saudi Arabia will refuse to cut production unless the other OPEC members do so; they are unwilling to do so as, in a vicious circle, they are struggling financially because of the low oil prices.
With large crops of soybeans due to be harvested over the next few weeks, a larger than expected UK harvest, the Australian crop receiving favourable weather and the Chinese economy slowing down, there is little bullish news in the market for OSR at the moment. However, OPEC members becoming vocal about low oil prices may have a knock on effect and drag up vegetable oil prices.
US wheat started last week with a sharp drop as fears over the rapidly shrinking Chinese economy sparked panic selling in global commodity and equity markets. Although wheat markets recovered from the extreme losses, fundamentals kept the pressure on throughout the week, culminating with the International Grains Council putting world total grain stocks at the highest in 29 years. Yesterday started another week with losses in wheat; the Chicago December contract hit new lows before closing marginally higher on the day.
Favourable weather continues for the US wheat harvest with spring wheat now 88% complete versus 36% this time last year. Exports, however, are 24% behind last year’s pace. Canada has also been dry, allowing harvest to progress there. Australian wheat is at a 4 month low; good rain remains in the forecast and September is the last critical month for the wheat crop, indicating that El Nino will not be an issue for this year’s crop.
Matif closed weaker yesterday. The cargo strike is at an end in Rouen allowing outloading to resume, but the delivery silos are all still closed for intake. EU exports were 325,000mt last week, giving a season total of 3.4mmt vs 4mmt this time last year. Russia was the cheapest offer again in the weekend’s Iraq tender at $231.70/t (£150.80/t). Russia is due to review its export tax and intervention prices on 10th September. Russian exports are well behind last year’s pace due to confusion over tax levels and lack of global demand. The rouble hit new all time lows last week, making for a heftier tax in the US dollar related export tariff currently in place. It is reported that Russian farmers are not selling due to the big discrepancy between export and domestic prices caused by the weak rouble.
UK market
London wheat ended last week at £113.65/t for November, down £1.10/t both on the day and over the week.
OSR market
Stock markets have continued to slide as fears continue over the slowing Chinese economy. In addition, the uncertainty over interest rates on both sides of the Atlantic is weighing on stocks.
There are currently no weather fears anywhere that may cut crop production. The fear of the El Nino in Australia is subsiding rapidly as ample rain continues to fall across all major crop growing regions of the country.
Crude oil rose over 6% yesterday due to a US government report showing crude production down 1% on the month and a bulletin from OPEC expressing the group's concern over the low price of oil. However, OPEC also stated that there is ‘no quick fix’ for low oil prices as Saudi Arabia will refuse to cut production unless the other OPEC members do so; they are unwilling to do so as, in a vicious circle, they are struggling financially because of the low oil prices.
With large crops of soybeans due to be harvested over the next few weeks, a larger than expected UK harvest, the Australian crop receiving favourable weather and the Chinese economy slowing down, there is little bullish news in the market for OSR at the moment. However, OPEC members becoming vocal about low oil prices may have a knock on effect and drag up vegetable oil prices.