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July 24, 2018

Wheat higher as harvest gathers pace

Cereals
  • Wheat continued higher today as harvest across the UK and northern Europe gathers pace and the impacts of drought are revealed.
  • Crops conditions in the US for corn have improved for the 2 key ‘I’ states ie Iowa (17% of the nat. crop) and Illinois (15%) with respectively 79% & 82% of the crop rated ‘Good/Excellent’ whilst a sharp 9% weekly drop in ‘GD/EX’ ratings was seen for Ohio at 72% [more here].
  • Beneficial weather is expected to benefit corn crops in the US over the coming weeks.
  • Follow through buys was seen on EU markets as MARS lowered their EU wheat yield forecasts to 5.8T/ha whilst spring barley was reduced to 4.1T/ha (-6%).
  • Egypt’s GASC purchased 420KT of wheat [of which 240KT Russian, 120KT Romanian and 60KT Ukrainian] at an average FOB price of ~$219.80/T. With a reduced 2018 Black Sea wheat crop, it was not surprising to see a sharp $15.50/T increase in price compared to the previous tender on July 10th 2018.
  • Black Sea export prices have risen as fears over yields and quality downgrades drive buyers to cover themselves.

Oilseeds

  • Avril, the largest biodiesel maker, has increased biodiesel output due to higher oil prices and offsetting some of the impacts of lower tariffs on Argentine SME.
  • US soybean condition improves due to the recent cooler weather with 70% of the crop seen in good to excellent conditions [more here]. However, the news of the day came from the White House with the Trump Administration set to provide $12B in support to US farmers following Chinese tariffs on US goods of which soybeans. Consequently, CBOT soybeans ‘jumped’ 1.3% to settle at a 2-week high.
  • OSR prices remained at equilibrium level and at multi-week highs as markets tussle between high stocks and reduced EU output.