US SRW wheat crop reported as ‘variable quality’ including the highest levels of vomitoxin seen in the last 10 years.
Russian Ag Ministry sees 2014/15 grain exportable surplus at 27.5-30mln t – with the crop ‘no less than 100mln t’.
Russian grains exports a/o 20th Aug were reported at 5.86mln t, up 22.7% on the year – wheat accounted for 5.15mln t.
Ukraine almost completes its 2014 wheat harvest at 24.4mln t (bunker weight) – this should result in a loss of around 5% on a clean weight basis – Ag Ministry.
Algeria’s state grain agency reports ‘it will reject blended cargoes containing wheat from different origins’.
Egypt’s GASC purchases 175,000t (60 Romanian / 115 Russian) for Sept 20-31 shipment – French wheat offered but about $7-10 too expensive.
Romania has reaped a record wheat crop in 2014 of about 7.4mln t.
Rain-damaged European wheat may hurt corn sales in Asia.
Australian western and eastern regions seeing less rain than expected – local crop forecasts being trimmed.
Drought seen trimming China’s corn output in northeast by about 3.5mln t – may increase import requirements.
Markets continue to be supported, on an almost weekly basis, by continuing tensions plus reports of a ‘Russian invasion ‘ in South-eastern Ukraine.
Another week where markets remain divided between reports of bumper US corn / spring wheat yields (although harvest remains delayed by rain) and tension in the Black Sea region, despite Ukrainian peace plans currently being discussed – albeit that as we go to press reports of a Russian invasion have spooked the market again.
Over the week, US corn market is weaker on the potential of record production, although wheat has gained on quality issues (SRW) and harvest delays in spring wheat, which has supported the KCBT exchange, dragging up CBOT in spread trading. Current peace talks over the Ukraine don’t seem to have weakened aggression at ground level, which normally excite the markets at the end of a week – although to date the market gives it back by Monday!
European markets have remained steady over the week, as traders are still trying to understand what they have, and more importantly where it will go! The blunt statement from Algeria threatening to reject ‘mixed origin cargoes’ will make their next tender very interesting, as the French will be unlikely to offer, the Germans are already heavily committed on quality sales to the Middle East, leaving the question, where do they buy it from? The MATIF wheat futures contract, given that most are unaware what quality they are actually trading, remains surprisingly supported, rising around €3/t on the week, but with the spec only being feed wheat at best many are questioning what exactly the MATIF contract is or stands for anymore – other than some sort of French farce.
The UK remains gripped by the current wetter weather, delaying harvests in many regions and potentially having a major impact upon overall quality – although to date it has held up surprisingly well. We have seen photographic evidence of large amounts of wheat being stored outside at co-operative central stores. A sign of the size of the crop and the lack of an adequate export programme to move supplies off the market?
In summary, a week without much fresh news to push the market either way. Good crop potential in the US keeps their markets under check, and in the EU, quality, or lack of it rules! Politics between Russia and the West, and what that means at ground level will provide market movements, both up and down, but fundamentally the market continues to be over-supplied, and, market lows will surely be tested again.
LEAD SHOT IN WHEAT
We have had several recent instances of flour millers and breakfast food manufacturers finding lead shot in wheat. The knock on effects of finding lead shot on delivery are obvious – rejection, extra haulage, loss of premium and the cost of cleaning – and if it gets into finished products the potential costs will be significantly greater still. In the light of this information we would strongly advise all farmers to check their stores and grain stocks thoroughly for lead shot.