UK wheat prices continue to trade sideways - £8/T range since the beginning of 2017 on the Nov-17 LIFFE wheat contract - amid tight domestic supplies, rapid pace of imports and uncertainty over the size of the coming harvest, found the weekly update from CRM AgriCommodities.
Indeed, in its monthly Mars bulletin, the European Commission cut its 2017 yield forecasts for all the major crops by 2 to 3% except corn, potato and sunflower due to persistent dryness mainly in Spain and France and unusually cold conditions [occurred] in large parts of western, central and northern Europe.
Meanwhile, the Turkish-Russian story is “to be continued”, said CRM. Due to political tensions between the two countries, Ankara is said to have imposed new restrictions, limiting Russian wheat imports to 20-25% of all wheat import licenses.
The London based analysts also noted that rain continues to delay Canadian spring wheat plantings and to threaten the quality and the quantity of the US crop; they fear the lack of rain could also put at risk the Australian crop, which is being drilled.
Furthermore, the CRM team said new rounds of short-covering are to be expected from the funds as they continue holding record short position in CBOT wheat and corn for this time of the season.
Politics is also playing a role in oilseeds markets price moves, with Brazilian president, Michel Temer, linked to a bribery scandal. As a result, the Real plummeted against the US dollar, which had the knock-on effect of raising domestic soy prices as Brazilian farmers are paid in that currency. That development, said CRM, led to farmers selling over 5 million ton in the days that followed, and soybeans traded lower at c$0.26/bu.
EU rapeseed values also fell €4 on the Brazilian scandal before recovering early this week. The Commission lowered its estimate for EU rapeseed yields once more now to 3.17T/ha, well below the five-year average of 3.25T/ha, due to a combination of cold and dry conditions this season.
Canadian canola planting delays due to wet weather remain a concern for farmers, as supplies were already tight because of strong exports and crushing, continued the review.
In the US, despite excessive moisture, soybean plantings remain surprisingly in line with the five-year average, said the agri-commodities experts. Some 52% of the intended acreage was planted as of the end of last week.
World exports of OSR and canola are likely to fall sharply into the end of the season with seasonal consumption falling also, added CRM.