USDA crop tour reporting bumper yields – analysts believe USDA is too low on yield, although maybe too high on area.
Russian farmers accelerate grain sales as loan costs surge.
Ukraine grain exports reported at 3.3mln t a/o Aug.14 – includes 1.34mln t barley / 1.55mln t wheat.
Ukraine Ag Ministry report wheat harvest virtually over – 23.8mln t in bunker weight – 40% feed quality (25% last year).
Strategie Grains hikes EU soft wheat production to 144.1mln t, warns of lower overall quality.
German farmer’s association DBV forecasts 2014 wheat crop at 26.2mln t despite rain. Concerns over quality as 30% is still uncut.
Record Indian 2013/14 grain harvest to help government face rain deficit for 2014/15.
Kazakhstan expects smaller grain crops in 2014 – seen restricting volume of grain exports.
BAGE sees Argentine 2014/15 corn plantings down 10% to 3.2mln hectares – due to low international prices / high sowing costs.
Another week of rumour and counter rumour, as earlier reports of potential crop losses due to the Ukraine and talk of export restrictions from the Black Sea region were quashed the following day leaving the markets to give back the previous day’s gains and some more. US markets have also been watching reports of the crop tours across the key US corn growing states, which are mostly reporting the likelihood of bumper yields. This should provide enough data to see an increase in the USDA yield number in September.
EU markets have retraced back to trading just above contract lows as traders are still trying to work out what quality the EU has! With reports that 30% of the German crop is still in the field there are increased concerns over final quality, potentially raising the volume of ‘feed grade’ wheat within the EU. The quality issue also seems to have spread east into the Ukraine, where 40% of its crop is reported as only feed quality, and also partially into Russia – it will be interesting at the next GASC tender to see who offers the spec and at what price!
The UK harvest is now turned into a ‘stop-start’ affair as growers dodge showers in order to harvest crops. With regional differences on the volume harvested, spot markets are driven by who wants the wheat, who has the wheat, and who can get the transport. Further delays due to the wetter conditions increases the loss of quality risk, with over 50% still uncut in some areas.
In summary, there is very little fresh news to talk about – crops aren’t getting smaller, but quality remains a key factor. Tightening of Black Sea financing, combined with a currency low, should continue to see increased farmer selling in order to obtain cash. This in the long-term could play a major role in the 2015/16 planting campaign – do farmers have enough finance to plant and grow a crop? As mentioned last week, markets have retested contract lows, but seem reluctant to push lower…. for the moment!