The new crop feed wheat market has suffered a volatile fortnight as the London LIFFE wheat future for November 2016 struggles to break the £120/T.
Values have ranged anywhere from £116.00/T – £120/T over the last ten days or so due to a mix of currency fluctuations, weather issues and production forecast adjustments.
Feed wheat for September collection is currently valued in the region of £110/T ex-farm. Further forward, £115/T ex-farm currently looks like a realistic offer for November/December collection.
As spring gets underway across the Northern Hemisphere (although I’m sure this is debatable for many of you), market focus has turned towards both the quality of the recently re-emerged winter crops and the condition of the newly emerging spring drilled crops.
Insufficient winter snow cover over in the Ukraine is believed to have caused damage to over 1 million hectares worth of winter wheat which could ultimately result in an overall downgrade to final production by as much as 20%.
Trade forecasts for this year’s total Ukrainian wheat crop are now in the region of 17 – 19 million tonnes depending on the success of this year’s spring drilling campaign.
Either way, we should expect a crop firmly below last year’s final tonnage of 26.5 million tonnes.
Production estimates for neighbouring Russia are also lowered although there is a heavier reliance on spring sown wheat here. Forecasts look favourable for the fortnight ahead although some dry weather could appear across central areas.
Elsewhere, the grain market has received mixed news from America over the last couple of weeks.
According to the US prospective plantings report (released 31 March by the USDA), the winter wheat area as we head into harvest 2016 is forecast at 20.1 million hectares. If realised, this will be the smallest crop for 46 years.
The spring sown crop accounts for an estimated 4.6 million hectares and I would imagine that the trade will keep an eye on this as the spring months pass.
However, simultaneous to the above the latest nationwide crop condition report from the USDA has confirmed that as of 1 April, 60% of the US winter wheat crops were in either a good or excellent condition.
The percentage at this rating is the highest for this stage in the season since 2010; crops are believed to have benefitted from ‘above average rainfall in late autumn’ and excellent establishment.
To summarise, the overall US wheat area may be comparatively small, but a larger percentage of this is already in the ground and in a very good condition.