Frontier Agriculture
Member
World markets
Wheat markets rallied last week mainly on the back of weather concerns, as the US plains, Australia and Russia were too dry and South America too wet. US futures were higher as the release of the USDA WASDE report approached but a neutral/bearish report brought markets back to close lower on the week.
The USDA raised both corn and wheat ending stocks again, with wheat increasing by nearly 2mmt and taking stocks to a new record of 228.49mmt. World wheat production was raised from 731.61 to 732.79mmt, another record. Increases were from the EU (+1.13mmt at 155.26mmt), Canada (+1mmt at 26mmt), Australia (+1mmt at 27mmt) and Ukraine (+0.5mmt at 27mmt). Most of these increases were expected but Australia was a surprise; the USDA stated that ‘Australia had sufficient sub-soil moisture that allowed it to withstand a drier-than-normal September; increased yield potential is supported by satellite imagery’. This contradicts local analysts who had reduced the crop since hot dry conditions do not usually lead to a yield increase. The report reduced US wheat exports by 1.36mmt to 23.13mmt; with exports well behind last year’s pace, this was expected.
World stocks have risen 51mmt over the last three years. Only a major weather issue or lower prices will halt this progress heading into 2016.
UK market
London wheat was helped on Friday by weaker sterling allowing it to close at the day’s highs of £117/t (Nov 15), £1.45/t higher over the week.
OSR market
The USDA report lowered soybean acres by 1.1M acres while lifting yield by just 0.1 bushels per acre, thus wiping 47M bushels off the crop. However, this was all offset by the lower export number. Overall, end stocks will be down 25M bushels to 425M bushels.
Although Matif closed higher on Friday, Canadian canola closed down later that night as the USDA report confirmed the higher crop of 14.3mmt.
Malaysian palm oil lost 7.5% from the previous week’s highs although the strength in its currency accounted for over 6% of this.
South American elections are on the horizon and have the potential to reduce soybean export taxes and currency devaluations. As a result, many Argentine crushers are considering early downtime to restart after the elections in the hope of a currency devaluation which would significantly increase farmer selling.
There is nothing currently bullish about oilseeds. Last week’s bounce is likely attributed to short covering and further investor inflow into the agricultural markets.
Wheat markets rallied last week mainly on the back of weather concerns, as the US plains, Australia and Russia were too dry and South America too wet. US futures were higher as the release of the USDA WASDE report approached but a neutral/bearish report brought markets back to close lower on the week.
The USDA raised both corn and wheat ending stocks again, with wheat increasing by nearly 2mmt and taking stocks to a new record of 228.49mmt. World wheat production was raised from 731.61 to 732.79mmt, another record. Increases were from the EU (+1.13mmt at 155.26mmt), Canada (+1mmt at 26mmt), Australia (+1mmt at 27mmt) and Ukraine (+0.5mmt at 27mmt). Most of these increases were expected but Australia was a surprise; the USDA stated that ‘Australia had sufficient sub-soil moisture that allowed it to withstand a drier-than-normal September; increased yield potential is supported by satellite imagery’. This contradicts local analysts who had reduced the crop since hot dry conditions do not usually lead to a yield increase. The report reduced US wheat exports by 1.36mmt to 23.13mmt; with exports well behind last year’s pace, this was expected.
World stocks have risen 51mmt over the last three years. Only a major weather issue or lower prices will halt this progress heading into 2016.
UK market
London wheat was helped on Friday by weaker sterling allowing it to close at the day’s highs of £117/t (Nov 15), £1.45/t higher over the week.
OSR market
The USDA report lowered soybean acres by 1.1M acres while lifting yield by just 0.1 bushels per acre, thus wiping 47M bushels off the crop. However, this was all offset by the lower export number. Overall, end stocks will be down 25M bushels to 425M bushels.
Although Matif closed higher on Friday, Canadian canola closed down later that night as the USDA report confirmed the higher crop of 14.3mmt.
Malaysian palm oil lost 7.5% from the previous week’s highs although the strength in its currency accounted for over 6% of this.
South American elections are on the horizon and have the potential to reduce soybean export taxes and currency devaluations. As a result, many Argentine crushers are considering early downtime to restart after the elections in the hope of a currency devaluation which would significantly increase farmer selling.
There is nothing currently bullish about oilseeds. Last week’s bounce is likely attributed to short covering and further investor inflow into the agricultural markets.