Feed wheat values are again improved this week as currency fluctuations ahead of next week’s all important European Referendum continue to drive the market.
Old crop feed wheat for July collection is currently valued in the region of £112/T - £113/T ex-farm and buyer interest is good.
As for new crop values, the London LIFFE wheat future for November 2016 has rallied to £125/T this week, a value not seen since December 2015. This is the equivalent of around £120/T ex-farm for September/October collection.
Further forward, £125/T ex-farm is offered for February collection.
The latest edition of the US Department of Agriculture’s monthly World Agricultural Supply and Demand Estimates were released towards the end of last week and although the report was generally bearish, the majority of the production figures forecast were slightly lower than those initially anticipated by the trade.
For wheat, global production is increased even further on last month’s estimate to 730.8 million tonnes – both US and European wheat production looks promising as we head into Harvest 2016.
For the US, production is forecast in the region of 56 million tonnes on “improved prospects throughout the great plains following excellent growing conditions throughout the spring months”. Hard red winter wheat yields are expected to be a record, resulting in a further increase to US ending stocks. 28.6 million tonnes worth of wheat is expected to be left over at the end of the next trading season, the largest for 29 years.
Closer to home, wheat production for the European Union is forecast at 157.5 million tonnes this year, only slightly behind the 160 million tonne record achieved in harvest 2015. The USDA added that crops are looking particularly well in Spain and a potentially record crop should be expected due to favourable growing conditions. As for France, production forecasts are unchanged despite concerns regarding the recent wet weather there; “abundant precipitation may have reduced yield prospects in low-lying areas, but it may well have increased yield potential elsewhere”.
The French wheat crop was in an excellent condition prior to the onset of the rain and expectations for a “return to dryness in the latter part of the grain filling stage are anticipated”, which should further mitigate crop losses.
With the recent European weather concerns put to bed (for now), market attention is firmly focused on next week’s European referendum. Results of various online Poll’s ahead of the vote are constantly switching between the ‘in’ and ‘out’ vote, hence the volatility within the grain market; it could be a rocky week ahead.