Frontrunner - 17th September 2021
Late last Friday the United States Department of Agriculture (USDA) published its September World Agricultural Supply and Demand Estimates (WASDE) report; much in line with traders’ expectations it produced neutral to bearish data. World wheat production is seen rising 3.7 million tonnes up to 780 million tonnes, with Australia up 1.5 million tonnes to 31.5 million tonnes and India up 1.52 million tonnes to 109.52 million tonnes. These increases in production estimates are offset by a one million tonne reduction in the Canadian estimate, which is now 23 million tonnes and a reduction in the Argentinian estimate of 500,000 tonnes to a new total of 20 million tonnes. A notable change was that world consumption last season was down four million tonnes, which increases the carry over to this season by the same amount; carry over stocks now sit at 292.46 million tonnes. 2021/22 year end stocks were increased by four million tonnes to 283.22 million tonnes in the August report, but stocks are still seen falling by nine million tonnes on the year. Almost half of global stock - 141 million tonnes - is in China.
Frontrunner - 10th September 2021
FranceAgriMer updated its French wheat crop data this week with changes that highlighted the poor quality of its crop. Domestic and export milling specifications demand that grain specific weight meets at least 76kgs but only 30% of the crop is estimated to have reached that standard. Such poor French wheat crop quality is unusual; last season over 98% of France’s crop met the minimum 76kgs standard. The Hagberg falling number (HFN) is also an issue, with only 67% meeting the minimum 220 specification. With up to 70% of French wheat only at feed standard, traditional UK feed wheat export homes will be extremely competitive. This likelihood has contributed to the additional negativity seen in UK wheat futures this week.
Frontrunner - 3rd September 2021
Earlier this week Statistics Canada (StatsCan) updated its country’s wheat crop estimate, now seeing the crop falling to 22.95 million tonnes. This compares to 35.18 million tonnes last year and, if realised, will be Canada’s smallest crop for 14 years. Persistent excessive heat and dryness for much of the growing season has slashed yield potential for Canada; one of the world’s major wheat exporters. In its August World Agricultural Supply and Demand Estimates (WASDE) report, the United States Department of Agriculture (USDA) cut its Canadian wheat estimate to 24 million tonnes from 31.5 million tonnes in July. Last season, Canada exported 27.5 million tonnes of wheat and ranked third in wheat volumes shipped, behind Russia and the EU and just ahead of the US. This season’s crop losses will have a major impact on world wheat trade flows and has been one of the primary bullish price drivers for wheat markets. US spring wheat futures are 60% up on the year as a result of tightening quality wheat supplies.
Frontrunner - 27th August 2021
In contrast to UK feed wheat futures, the Paris futures market has a milling standard specification. Under normal circumstances traders may elect to deliver physical wheat against their futures sales at harvest or buy futures as a hedge against milling wheat export sales they make. However, the adverse French weather and delayed harvesting has seen lower than average specific weights, particularly in northern France, and has left traders unable to source wheat of a sufficient standard to meet the specification required for export (78kgs) or the specification required for futures wheat (76kgs).This has forced traders with short futures positions to buy back their contracts rather than deliver physical wheat. Last week, this resulted in the nearby September position hitting a €30/t premium to the next December position and saw prices rise to their highest level since 2013.
Frontrunner - 20th August 2021
In its August World Agricultural Supply and Demand Estimates report, the United States Department of Agriculture surprised markets last week with larger-than-expected production cuts for some of the world's major wheat and corn producers. After the report was released, strong wheat futures surged a further 5% to multi-year highs. However, fresh selling and speculators banking profits gathered pace throughout this week and wiped out the short-lived spike in prices.
Frontrunner - 13th August 2021
The United States Department of Agriculture (USDA) published its August World Agricultural Supply and Demands Estimates (WASDE) report on Thursday and presented some bullish surprises. Futures markets reacted with notable gains and US, Paris and London wheat futures all rallied to set new contract highs.Having taken an overly conservative view of potential crop losses in its July estimates, this time the USDA made some aggressive production cuts. This was particularly the case for Russia where the USDA estimates the wheat crop will be as low as 72.5 million tonnes. This compares with its July estimate of 85 million tonnes. Earlier this week, the Institute for Agricultural Market Studies (IKAR) lowered its production estimate to 77 million tonnes, reflecting poorer than expected yields.Notable production losses are also seen as a result of the drought that has ravaged Canada; the USDA sees Canadian production falling to 24 million tonnes, compared to its previous July estimate of 31.5 million tonnes. In contrast, both Ukraine and Australia are seen producing larger crops than estimated in July at 33 million tonnes (up 3 million tonnes) and 30 million tonnes (up 1.5 million tonnes) respectively.
Frontrunner - 6th August 2021
This week, the UK’s oilseed rape harvest has continued making progress further up the country where weather has allowed. As mentioned last week, yield reports seem to be improving as harvest makes its way north. An increase on the widely estimated 3.3t/ha may well be seen before harvest with numbers as high as 5t/ha being reported in the Lincolnshire area.
Frontrunner - 30th July 2021
Wheat long-holders in many areas can still achieve attractive premiums for old crop wheat as the market scrambles to find stocks to service late-season demand. In Scotland and the North of England particularly, wheat prices that are £30-40/t above harvest levels should encourage most sheds to be emptied as the country enters a new crop year with bare boards and minimal carryover. As wheat harvest started in the south this week, most merchants and consumers will breathe a sigh of relief as we come to the end of one of the smallest UK crop years in recent history.
Frontrunner - 23rd July 2021
Persistent hot and dry weather continues to damage spring wheat crops in the northern US states, particularly North Dakota and Minnesota. Weekly crop condition ratings slipped to 11% rated ‘good to excellent’, which is just one point above the worst condition rating on record in 1988. The area rated ‘poor to very poor’ increased on the week to 63% from 55% and this data propelled US spring wheat futures to new contract highs - their highest level since November 2012. The weather forecast signals little relief for parched crops and similar problems persist in the Canadian prairies. In its July World Agricultural Supply and Demand Estimates (WASDE) report the United States Department of Agriculture (USDA) cut its Canadian wheat crop estimate by just 500,000 tonnes to a new figure of 31.5 million tonnes, which compares to 35.18 million tonnes produced in the previous season. However, some see Canada producing as little as 25 million tonnes, an estimate which tightens global supply of high-quality bread making wheat.