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Wheat Market Update - Thursday 2nd July 2009
UK and Europe Harvest Overview
Harvest is progressing well in Southern Europe and here in the UK wheat crops will be benefiting from the current fine weather.
UK wheat harvesting could commence within the next 4 weeks, with early yield and quality reports eagerly anticipated.
Wheat futures markets across the globe have fallen sharply over the last few weeks, as rainfall has allayed concerns that production figures would be marked down. Traders have, however, continued to report low levels of physical wheat trade, with growers reticent to sell ahead of harvest at current lower prices. New crop breadmaking premiums are also unlikely to be discounted ahead of better knowledge of harvest quality.
US/World Overview
The latest USDA plantings and stocks report issued this week surprised the market and initially sent futures markets into a ‘tailspin’. Corn and wheat plantings figures were all higher than trade expectations which, for the latter, could mean the prospect of the second largest crop in history.
Global wheat supply should keep ahead of demand moving into 2010 and with the winter wheat crop 40% complete in the US, final yield estimates will be closely monitored.
Summary
Wheat markets globally appear heavily oversold and arguably require a consolidation period at present.
Market Fundamentals of Supply and Demand have finally stamped their authority on price direction over the last few weeks.
With harvest rapidly approaching in Northern Europe, quality outcome will be a ‘key’ factor, and with a few early reports in the US that some quality has sacrificed to yield, it should not be assumed that breadmaking premiums are on a downward path here in the UK.
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