Egypt’s GASC issued a tender to purchase wheat and bought 110kmt from
European origins, from a total of 2mmt offered. CBOT wheat did its best
tortoise impersonation and quickly pulled its head in, overwhelmed by the
sheer volume of cheap grain being offered. Interesting to note that Russia was
not the cheapest and did not feature on the podium. In fact, Russian wheat FOB
values have increased week on week to around US$202-205/t. March exports are expected to top 4.8mmt, erasing the Feb record of 4.1mmt.
Part of the increase can be
attributed to a perception that the Russian crop could do with a drink. Despite
adequate moisture before dormancy, and no real problems over winter, the past 30 days have been abnormally dry. The next 10-day period remains dry as well. Were this trend to
continue, say until mid-April when the crop would be approaching flowering, it could completely turn
the market on its head.
Stratégie Grains (European analysts) reduced their EU27 wheat and barley forecasts due to wet weather, particularly in France. The wheat crop was reduced a further 1mmt to 121.6mmt, down 4% year on
year. For reference, the European Grain Association Coceral has EU27 wheat production at 134mmt, so there is a fair bit of discrepancy between organisations.
The French wheat crop was also rated 66% good/excellent, slipping 2%
points on the week. The 2020 crop (which was very poor) was rated 63% good to excellent at the
same time of year.
Canola has had a very welcome boost in the past couple of
weeks. Concerns around oilseed production in Europe and Canada for the 24/25
season have lifted MATIF (Euro market exchange) and spurred some technical short-covering. Rising crude prices and tightening Malaysian Palm Oil stocks are also
helping.
Smaller rapeseed crops are already expected in Europe and Ukraine in
2024. Stratégie Grains predicts an 8% fall in the EU27 crop from 2023, while
UkrAgroConsult points to a 9% decline in Ukraine’s crop. A recent grower survey in the UK
indicated a 28% swing away from the crop. Longer term, the large soybean crop in Brazil
and the potential for global stocks to build year on year will keep a lid on
prices.
Hopes rising or a false dawn?
Next week
Short term I think the market resumes a negative trend. The funds have trimmed their short positions, the global cash price is still being pressured by surplus supply – particularly from Europe and the Black Sea – and it remains too early to make too many predictions about Northern Hemisphere production.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Reuters, AHDB, Stratégie Grains, UkrAgroConsult, Next Level Grain Marketing, Mecardo
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