Frontier Agriculture
Member
World Markets
The rally on Chicago wheat continued yesterday with more fund short covering lifting wheat to a four-month high. US export numbers came in with more positive figures showing 580,000mt for the week, which is a six-week high and takes the running total closer to last year’s pace, lagging just 4% now.
This is supportive to US markets but it was dryness in the Plains really driving the market higher. US crop ratings came out showing historic lows – Kansas wheat crops were rated 44% poor to very poor, up from 22% last month. It is difficult to gauge how this will affect yield at this time of year but it is clearly enough to worry the funds, especially in light of the fact that US plantings were already at a 100-year low. The forecast remains unchanged with a little rain in the East but dry everywhere else.
Matif wheat also went up yesterday, reaching a two-week high. A weaker euro helped add to the support coming from overseas, slow farmer selling across Europe is driving up physical pricing and a stronger Russian Rouble is helping to lift Russian values and further support global wheat markets. There is still no weather threat for the big wheat-producing areas of Russia and Ukraine – there is plentiful snow cover protecting crops now and Ukraine wheat crops are rated 50% good to excellent which is better than last year.
UK Wheat
London wheat did move higher yesterday but was not feeling as bullish as US and EU markets – May 18 closed up £0.80/t at £139.75/t. The May 18 chart has developed a downward trend line and shows upside resistance at £140/t now, which seems to be confirmed in recent sessions when trade has neared £140 and then has fallen back again.
The UK is still not finding any export demand and although weather factors overseas are giving some follow over support, UK wheat needs to find additional demand to fully shake off its bearish sentiment in old crop positions.
Oilseed Rape
There is split weather in South America – heavy rain in Brazil is delaying harvest while Argentina gets progressively hot this week. This pattern is keeping everyone guessing as to the extent the Brazilian crop can or will compensate for Argentine crop losses.
There was a good bounce in prices yesterday helped by sterling’s weakness and in Matif following the oilseed complex higher. There is nothing to suggest this trend will continue (unless the above becomes extreme) and the higher we go the more farmer selling we will encounter. This will be a natural barrier to any significant and prolonged rally. In light of the stock levels of rapeseed and rapeseed oil that currently exist in Europe, selling into the rallies whilst monitoring South America would be a strategy to advocate.
US exports are not living up to USDA expectations and are well down on last year’s. We have yet to see a response from China regarding imports due to the imposition of import tariffs recently placed on Chinese washing machines and solar panels. This will need watching.
The rally on Chicago wheat continued yesterday with more fund short covering lifting wheat to a four-month high. US export numbers came in with more positive figures showing 580,000mt for the week, which is a six-week high and takes the running total closer to last year’s pace, lagging just 4% now.
This is supportive to US markets but it was dryness in the Plains really driving the market higher. US crop ratings came out showing historic lows – Kansas wheat crops were rated 44% poor to very poor, up from 22% last month. It is difficult to gauge how this will affect yield at this time of year but it is clearly enough to worry the funds, especially in light of the fact that US plantings were already at a 100-year low. The forecast remains unchanged with a little rain in the East but dry everywhere else.
Matif wheat also went up yesterday, reaching a two-week high. A weaker euro helped add to the support coming from overseas, slow farmer selling across Europe is driving up physical pricing and a stronger Russian Rouble is helping to lift Russian values and further support global wheat markets. There is still no weather threat for the big wheat-producing areas of Russia and Ukraine – there is plentiful snow cover protecting crops now and Ukraine wheat crops are rated 50% good to excellent which is better than last year.
UK Wheat
London wheat did move higher yesterday but was not feeling as bullish as US and EU markets – May 18 closed up £0.80/t at £139.75/t. The May 18 chart has developed a downward trend line and shows upside resistance at £140/t now, which seems to be confirmed in recent sessions when trade has neared £140 and then has fallen back again.
The UK is still not finding any export demand and although weather factors overseas are giving some follow over support, UK wheat needs to find additional demand to fully shake off its bearish sentiment in old crop positions.
Oilseed Rape
There is split weather in South America – heavy rain in Brazil is delaying harvest while Argentina gets progressively hot this week. This pattern is keeping everyone guessing as to the extent the Brazilian crop can or will compensate for Argentine crop losses.
There was a good bounce in prices yesterday helped by sterling’s weakness and in Matif following the oilseed complex higher. There is nothing to suggest this trend will continue (unless the above becomes extreme) and the higher we go the more farmer selling we will encounter. This will be a natural barrier to any significant and prolonged rally. In light of the stock levels of rapeseed and rapeseed oil that currently exist in Europe, selling into the rallies whilst monitoring South America would be a strategy to advocate.
US exports are not living up to USDA expectations and are well down on last year’s. We have yet to see a response from China regarding imports due to the imposition of import tariffs recently placed on Chinese washing machines and solar panels. This will need watching.