Wh(e)at goes up must come down

[CRM AgriCommodities]

Wheat took a breather today on both sides of the Atlantic, reversing from multi-month high on profit taking and a dearth of fresh news. The strong recovery in both the Sterling and the euro against the US dollar was adding pressure in Europe. Volatility is still intact with the 5-day average trading range (ie difference between the high and the low) on the May-20 LIFFE feed wheat contract standing at £4/T against ~£1/T at the beginning of the year. The May-20 LIFFE feed wheat abandoned £3.45/T or more than 2% - its biggest daily loss since mid-August 2019. New crop Nov-20 LIFFE feed wheat followed the same direction, settling £3.25/T lower and as such, the spread between old crop and new crops continues to hover over the £10/T mark (new crop over old crop). May-20 Euronext wheat finished deep in the red and at today's low on profit-taking and a sharp 1.3% rally in the euro against the green back which makes the EU origin less competitive on the export market. CBOT wheat posted double-digit losses despite good weekly US export sales (740KT vs 200-500KT expected) with traders taking their gains off the table after a staggering 16% rally in the past 7 sessions and ahead of next week's USDA Prospective Plantings and US Stocks reports. CBOT corn was virtually unchanged torn between excellent weekly US corn export sales of 1.8MMT [of which nearly 760KT to China] and ongoing weak ethanol demand. According to a Reuters poll, US farmers will plant 94.3Mac of corn for the 2020 harvest, a 5.2% or 4.6Mac increase on last year. Bear in mind, that the USDA conducted its survey a few weeks ago, before contract lows were scored on Mar 18th. The trade is eagerly discussing the potential grain export restrictions in Russia amid rising domestic prices, a weak ruble and persistent dryness which could soon impact winter wheat yield potential. Even if the lack of moisture is severe in Southern Russia, the NDVI [crop vegetation index] stands at its second highest level in more than 20 years for this time of the season in the key producing region of Krasnodar (Southern Russia). The Argentine corn crop condition continued to deteriorate in the week ending Mar 25th with only 32% rated 'Good/Excellent' against 35% last week and 54% last year. The harvest is about 16% complete vs 12% last year/on average. [Source: BAGE, full report] According to the IGC, the 2020/21 'global total grains production is projected to expand to 2,223MMT, up by 2% year-on-year and an all-time high'. The 2020/21 global wheat production is seen at a record 768MMT vs 763MMT in 2019/20 whilst 2020/21 ending stocks are projected at 283MMT or +9MMT year-on-year. It is important to note that the IGC anticipates to see a further decline in the wheat stocks of the major exporters from 67MMT to only 63MMT [more info click here]. The Philippines are in the market for both feed and milling wheat. To find out how this impacts your business and for insights, opinions, strategies and more get in touch. Or call 01223 608910. ​ Rapeseed higher for a 2nd consecutive session Despite tumbling crude oil/weaker vegoil prices, May-20 Euronext rapeseed continued higher for a 2nd consecutive session, settling above the 350€ mark for the first time in 2 weeks. Gains were limited in the UK due to the rallying Sterling. May-20 CBOT soybean edged lower, hovering over the c$880 short-term support level despite strong weekly US export sales of 900KT of which 200KT to China and against 400-800KT expected. Traders await further news from South America in particular Argentine where 'a labor union representing Argentine grains port workers on Thursday asked the government to suspend exports' [full article click here]. CBOT soymeal prices remain extremely volatile with the May-20 contract having traded in a $10.5/sT range today. US farmers are expected to plant 84.9Mac of soybeans for the 2020 harvest ie +11.5% on last year and the 3rd largest on record [Source: Reuters]. The final acreage could be even higher amid low corn prices. The IGC expects the 2020/21 world soybean production to jump 25MMT [mostly due to a recovery in the US output] to a record 366MMT. According to the Buenos Aires Grain Exchange [BAGE], 34% of the Argentine soybean crop was in 'Good/Excellent' condition as of Mar 25th vs 35% the week before and 51% last year. The harvest is just kicking off [4.6% complete vs 4.7% on average]. To find out how this impacts your business and for insights, opinions, strategies and more get in touch. Or call 01223 608910. ​ Charts relevant to your grain prices: ​ ​

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