Frontier Agriculture
Member
World markets
US wheat closed lower on Friday and showed a net loss over the week. Better weather forecasts for winter wheat areas, particularly Oklahoma, pressures values. This week, 0.25-1 inch of rain is expected for parts of the Plains. A negative set of export data also weighed on US wheat markets – cumulative wheat sales are at 91.3% of USDA forecasts versus a five-year average of achieving a 96.4% cumulative total versus forecasts. This indicates the USDA may need to drop their estimate in the next report which would likely lead to a higher stock build.
Continued rain in Argentina is helping wheat crop prospects – the government left the 2017/18 crop unchanged at 18.5 million tonnes in a release last week but did not estimate new crop numbers. They downgraded the 17/18 corn harvest to 42 million tonnes from 49.5 million tonnes last year. Australia is still suffering dry conditions and the lack of rain in the forecast is causing growing concern.
Matif wheat was pressured by poor export figures. Weekly shipments were 368,000 tonnes, giving a season total of 17.1 million tonnes which is still 24% behind on last year’s pace. If the current pace continues they would be about four million tonnes short of the USDA’s 24 million tonne estimate.
UK markets
London wheat traded to six-month highs of £148/t early last week but eventually ran out of steam, closing at £143.00/t on Friday. It was down £2.75 on the day and £4.50/t down on the week.
Domestic markets are still experiencing logistic issues due to the longer distances that wheat is travelling from farm to mill to meet the key northern demand points. With ports having been very quiet all season, wheat is being pulled further inland to find a home. The spike in wheat futures early last week allowed more imported wheat to price into northern ports which will help to ease the logistics pressure. This dynamic of hitting import parity, as well as sliding US markets, lead to lower UK values to end the week.
Milling wheat premiums have picked back up from recent lows. Requirements for the summer months are supporting premiums and ideas that some milling wheat has already moved as feed during the period of lower premiums.
US wheat closed lower on Friday and showed a net loss over the week. Better weather forecasts for winter wheat areas, particularly Oklahoma, pressures values. This week, 0.25-1 inch of rain is expected for parts of the Plains. A negative set of export data also weighed on US wheat markets – cumulative wheat sales are at 91.3% of USDA forecasts versus a five-year average of achieving a 96.4% cumulative total versus forecasts. This indicates the USDA may need to drop their estimate in the next report which would likely lead to a higher stock build.
Continued rain in Argentina is helping wheat crop prospects – the government left the 2017/18 crop unchanged at 18.5 million tonnes in a release last week but did not estimate new crop numbers. They downgraded the 17/18 corn harvest to 42 million tonnes from 49.5 million tonnes last year. Australia is still suffering dry conditions and the lack of rain in the forecast is causing growing concern.
Matif wheat was pressured by poor export figures. Weekly shipments were 368,000 tonnes, giving a season total of 17.1 million tonnes which is still 24% behind on last year’s pace. If the current pace continues they would be about four million tonnes short of the USDA’s 24 million tonne estimate.
UK markets
London wheat traded to six-month highs of £148/t early last week but eventually ran out of steam, closing at £143.00/t on Friday. It was down £2.75 on the day and £4.50/t down on the week.
Domestic markets are still experiencing logistic issues due to the longer distances that wheat is travelling from farm to mill to meet the key northern demand points. With ports having been very quiet all season, wheat is being pulled further inland to find a home. The spike in wheat futures early last week allowed more imported wheat to price into northern ports which will help to ease the logistics pressure. This dynamic of hitting import parity, as well as sliding US markets, lead to lower UK values to end the week.
Milling wheat premiums have picked back up from recent lows. Requirements for the summer months are supporting premiums and ideas that some milling wheat has already moved as feed during the period of lower premiums.