Old crop feed wheat for spot movement is this week valued at £145/T+ ex-Farm as a sudden surge of buyer interest drives the market.
Rumours would suggest that Hull’s Bio-ethanol plant is set to open within the next fortnight although it has not yet been confirmed whether or not the plant will run to its full capacity.
According to Agrimoney.com (please see their website for more on this), the trade is now well aware “of that fact that there is a drought in Argentina and crop loss has taken place; the question now is just how much production has been lost and if it can be offset with elevated production in other countries”.
But have the worst of the potential production losses in Argentina already been factored in to current ex-farm values? And could the Brazilian harvest compensate for Argentinian losses?
This month’s World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA) are due for release today (8 March) – let’s hope that the report can provide the trade with some clarity.
The recent dry weather is also set to continue throughout the US southern plains. Some rain is expected to fall in the South-East later this week which will marginally improve moisture in the short term.
In Kansas, the largest planting state for US winter wheat, the proportion of the crop rated as good or excellent declined from 14% in January to 12% in February. AHDB have added that “the current level of damage can really be put into context when compared to last year’s crop at the same stage, when 43% of winter wheat was rated as either good or excellent”.
There was also no improvement to conditions in Oklahoma between January and February, where winter wheat crops rated as good or excellent remained at a worryingly low 4%. Crops in Colorado, Montana and Nebraska have also suffered.
Some forecasters are concerned that rain may not reach the worst affected areas for another fortnight, leaving an open window for conditions to worsen. Again, it will be interesting to read this week’s USDA report.
As far as I can tell, last week’s “European and Black Sea cold snap” is poised to dissipate without too much damage. Insulating snow cover was apparently “sufficient enough” to protect wheat from winterkill in most areas although some damage did occur in eastern Poland, Slovakia and the Czech Republic.
Here in the UK, the infamous “Beast from the East” gave the London wheat market a boost last week and it certainly inspired several buyers of new crop wheat.
However, the UK is very much part of a global market and the weather further afield on the continent is much more likely to push or pull the market this week. Regardless, the bullish sentiment appears to have subsided as new crop futures drift lower.