Frontrunner - 7th May 2021
Persistent dryness across many of the primary corn growing regions of Brazil is continuing to stress late drilled corn crops and impact their yield potential. In April, the estimate from the United States Department of Agriculture (USDA) for the Brazilian corn crop was at 109 million tonnes, but analysts see the lack of rain taking at least nine million tonnes from that crop potential. If the dryness continues, there are concerns that the crop could fall to as little as 90 million tonnes. These significant losses amidst increasing Chinese buying will push additional demand to US supplies, with the US exportable surplus already sold out. This has encouraged increased speculative buying and seen Chicago Board of Trade (CBOT) corn futures rise by over 40% since the end of March. CBOT corn futures have risen to their highest level in eight years and for the first time since July 2013, the near contract position has overtaken wheat.
Frontrunner - 30th April 2021
Wheat and corn futures continued to drive higher earlier this week, setting new contract highs. US markets reached their highest level for eight years and Chicago Board of Trade (CBOT) corn futures pushed above $7/bu – a level double their contract low. New crop London wheat futures at their highest had risen over this month by an impressive £35/t. Higher European futures markets reflected concerns for both winter and spring crops following the prolonged period of dry weather and, in places, record low April temperatures impacting on most of northern Europe. However, with strong speculative buying, futures markets had become technically overbought and were overdue a correction. Forecasts for much needed rain seemed to be the trigger for a wave of profit-taking which drove markets sharply lower during the second half of the week. Upbeat wheat production prospects for Romania were another negative element. Romania’s enthusiasm to sell new crop wheat was highlighted in the tender held by Egypt this week.
Frontrunner - 23rd April 2021
Persistent cold dry weather affecting much of the US and Western Europe coupled with ongoing Chinese demand drove wheat and corn markets sharply higher this week. Chicago Board of Trade (CBOT) wheat futures have gained over 8% since last Friday’s close and are trading over $7 per bushel, bringing them to their highest level since May 2014. European new crop wheat futures have been equally impressive, setting new contract highs. London November 2021 wheat futures are now £26/t above their end of March low.US winter wheat crop ratings were unchanged on the week with 53% rated ‘good’ to ‘excellent’ which is four points below last year. However, subsequent reports from Oklahoma of frost-damaged winter wheat helped galvanise speculative buying. Corn planting reached 8%, which is average for this time of year, but the cold US weather conditions are seen delaying crop establishment and yield potential, therefore adding more demand for depleted old crop supplies. Record low April temperatures coupled with a lack of rain is increasingly concerning for wheat crop production potential in Western Europe.
Frontrunner - 16th April 2021
Wheat markets continued to rise this week, reacting to increasing concerns for wheat crops as dry and very cold weather persists in Western Europe and parts of the US. The latest US drought monitor maps show an increasing area of extreme drought now impacting on over three-quarters of major spring wheat state, North Dakota. However, spring wheat drilling in the state achieved 8% completion by 11th April compared to the 2% average for this time of year. Nationally, spring drilling is 11% complete compared to the 6% average. Dry cold conditions remain in the forecast and US spring wheat futures rallied to new contract highs this week. In contrast, the central southern plains are due rain which will benefit winter crops. The condition of winter wheat crops remains unchanged at 53% rated ‘good’ to ‘excellent’. Record low April temperatures have been prevalent in France and the UK. How damaging this has been for cereal crops remains to be seen. With more dry weather forecast for Western Europe, new crop wheat futures rallied to new contract highs. London new crop wheat futures have added a significant £15/t to their values since their lowest point in March, bringing them now to their highest values this season.
Frontrunner - 1st April 2021
On Wednesday 31ST March, the United States Department of Agriculture (USDA) published its quarterly US stock and acreage report. It contained bullish data for corn that triggered a sharp price rally for Chicago Board of Trade (CBOT) corn futures, sending them to new contract highs; the highest level seen since 2013. Despite the report having bearish wheat data, wheat futures followed corn futures higher, ending the recent slide in prices that had dropped to a three-month low prior to the report.In recent weeks, analysts have been very upbeat about US famers reacting to high corn prices and significantly increasing the corn area they plant this spring. Estimates have been as high as 94 million acres compared to 90.8 million acres last year. At its Outlook Forum in February, the USDA saw US farmers planting 92 million acres of corn. Average trade guesses before the report were 93.28 million acres. However, in the report, the USDA has revised its estimate with only a small increase on the year, bringing the new predicted acreage to 91.144 million acres. Using trend line yield data, this would leave 2021 US production short of expected domestic and export demand, cutting stocks and leaving a bullish outlook. US quarterly corn stocks estimates were also bullish, seen at 7.701 billion bushels, which is below average trade guesses and down 3% on the year.
Frontrunner - 26th March 2021
World wheat markets have fallen again this week and have now effectively lost all the price gains they made in 2021. London wheat futures fell to their lowest level since the 17th December. In January, fears that Russia would close the door on wheat exports saw Black Sea export prices soar to £300/t free on board (FOB), before including freight costs. Buyers are now harder to find and traders’ offers were reported to have fallen to $250/t searching for demand. Prices have fallen sharply despite strong exports to date for the world’s major producers. Weekly wheat export sales for the US were 344,000 tonnes, taking the season’s total sold to almost 93% of the surplus estimated by the United States Department of Agriculture (USDA), which is just ahead of average at this time of year. From this point, sales only need to average 80,000 tonnes per week to hit the estimate. US weekly corn sales included the 3.8 million tonnes that China bought last week, bringing the total sold to just over 4.6 million tonnes. Over 98% of the USDA’s estimated surplus is sold, which is 25 points on the average at this time. If just 1% of last week’s sales are made each week to the end of the season, the USDA target will be exceeded.
Frontrunner - 19th March 2021
Please note, in this audio report China was reported to have purchased three million tonnes of US supplies during the week commencing the 15th March 2021. Following the release of this recording, China purchased a further 800,000 tonnes.World wheat markets have slipped 2-3% lower this week following better than expected wheat crop estimates from analysts for many of the world’s primary wheat exporters: the US, Russia, Ukraine, and the EU. Much of the US wheat belt has stayed dry for several months but recent snow and rain has proved beneficial. Weekly crop ratings were ‘good’ to ‘excellent’ for both Oklahoma and Kansas which were up four points to 57% and two points to 38% respectively. More rain is due with significant storms forecast to arrive.
Frontrunner - 12th March 2021
Earlier this week, the United States Department of Agriculture (USDA) published its March World Agricultural Supply and Demand Estimates (WASDE) report. Speculative traders holding significant long positions in US grain futures were hoping for a helping hand to support their bullish view but were left disappointed. It was expected that the USDA would lower its corn production estimates for Argentina and Brazil following dry weather in Argentina and excessive rainfall in Brazil. The wet conditions in Brazil have delayed soybean harvest and consequently delayed planting corn crops at the optimum time. However, the USDA made no changes to these estimates.
Frontrunner - 5th March 2021
World wheat markets have slipped this week. A lack of fresh bullish features has led to spells of profit taking from speculative buyers who still carry significant long positions in grain futures markets. US weekly wheat export shipments and sales were particularly disappointing. However, the weekly export pace from the EU was far more encouraging. Wheat shipments for last week were one million tonnes, taking the total now shipped to over 17.5 million tonnes.Analysts estimate the EU, including the UK, will ship just over 26 million tonnes. This will leave end June stocks extremely tight at around ten million tonnes. Last season from the beginning of March to the end of June, the EU shipped over 13 million tonnes during a period when there were no Russian export taxes and therefore stronger competition. However, this week, the world’s major importers, Egypt, Algeria and Saudi Arabia, have again been absent from the market, leading to concerns for export demand for the remainder of the season and adding to market weakness. Remaining old crop supplies may be tight but carry a $40-50/t price premium to new crop. Perhaps importers will target cheaper new crop supplies if they have sufficient stocks to wait until they are available.