17.
05.14
Wheat prices: Front dates like - later delivery months stable to increasing

Getreide Cockpit, 17.05.2014

Bullish
  • Weather-related uncertainties in the next few months
  • EL Nino - damage in the later harvest dates of the engineer year
  • Dlkdfg political uncertainties
  • Catching up on the necessary storage
Bearish
  • Prospects for a second best grain harvest at world level
  • Weak food demand due to lower livestock
  • China factor is less than 2014/15
  • post-crisis world economic growth with limitation of consumption

Forward rates by State-16 may 2014

Converted into € je

Sept 14

Nov 14

Jan 15

March 15

May 15

Wheat, Paris

-

199,25

199,50

199,75

200.00

Wheat, Chicago

181,95

Dec. 14: 186,08

190,01

191,81

Grain courses give to - wheat under €200 / tonne in Paris - €180 / t in Chicago

The USDA estimate last weekend beg. May contributed to increased rate cuts at the front dates. Stock market participants assume increasingly a large world harvest, which should lead to a good average supply situation as a result. Anyway, that can be derived from the most recent results of the estimator.

However, there are a number of caveats and uncertainties which provide the reliability of the targeted price developments in question. Anyway, the rear forward rates in the stock markets show a relatively stable development expectation.

First, it seems to have found, that the U.S. wheat crop and export by around 10% will be worse in the United States that. The drastic reduction in the Canadian wheat harvest leaves no lasting impression; on the exchanges It refers to the average overlays in this year. 

In the Black Sea region, the official harvest estimates to those from private market and contradict consultant circles. In the case of Ukraine , the farmer with 30 to 50% must calculate higher operating costs arising from inflation in prices, and by borrowing the weak Ukrainian currency has become expensive. The estimation results to differ simply because the acreage reductions to around 1 million hectares (10%). For financial reasons to sparingly used yield-enhancing working capital are likely to again leave their effect in average yields. Weather still somewhat involved so far. At the recent wheat export after Egypt, the Ukraine has surprisingly been awarded.

Russia reports unusually low Dewinterizing damage. The spring orders should be run under favorable conditions. However the low ground water supply worry, because usually little precipitation will be expected in the coming months. However critical tones about the crop output are beaten in Central Russia and the Northern Caucasus region. The estimated surplus stocks should be smaller than previously assumed. Russian exports and participation in invitations to tender have become noticeably less, to bring the self-sufficiency not in danger.

The agro-meteorological estimates of the European Commission have again raised the yield forecasts for the EU territory . Set among the results, calculated a crop significantly above the mark of 300 million tonnes and well above the USDA estimate with only 297 million tonnes.  Most likely the EU will occupy the leading position in the global wheat export in the coming year before the United States. Thus, the missing quantities in the North America and the Black Sea region to a considerable extent be intercepted. The convenient transport routes to the major importers of the North African Mediterranean coast support this development. The euro still plays with a strong competitive position of the EU on the world market with the result that a significant portion of surplus generation in the export marching is created. The perspective of high exports represents the expected high EU crop in a supply picture critical to observable with regard to pricing. The U.S. soybean market oversold delivers relevant illustrative material.

Still great uncertainty posed by the El Nino weather anomaly. The probable arrival is estimated to be over 70%. EL Nino is different each time. While in the northern hemisphere hardly noticeable effects are to be expected, it directly concerns Australia, India and other parts of Asia . South America will be affected. In cereal crops , mainly drought-induced damage in Australia and India are expected, while in South America both drought and heavy rains are to be feared.

The strong China's grain imports have made in recent years for high attention. According to current knowledge, a direct continuation of this import activities to same extent is not expected to. From 18.5 million tonnes the previous year imports should go back in 2014/15 to 13 million tons. The Chinese end stocks to rise by 5 million tonnes to 142 million tonnes, significantly more than in the 7 leading export countries together.

World's stagnant to declining cattle numbers ensure that low inflation is expected to demand. However, the low initial stocks provide a pent-up demand to replenish inventories deemed necessary. Thus, part of the expected surplus generation is caught. The preliminary estimates provide a good average supply situation as a result. The long-standing relationship between supply number "% end inventory for consumption" (stock to use ratio) to the wheat price level average prices in the average can be derived. The stock prices of future months show a level of relevant and appropriate direction.

Wheat prices: Front dates like - later delivery months stable to increasing
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ZMP Live Expert Opinion

The inflated fears a U.S. wheat crop reduced by dry damage and Auswinterungs - have subsided somewhat. The voltage to a timely U.S. corn seeding has also decreased. The supplied risk premiums can be shortened slightly even in the case of the Black Sea region. From a good harvest of EU wheat exports will be increased in a certain leading position. For the time being a good average supply situation on the world grain market 2014/15 is emerging, especially as the demand side has no above-average effect. A price adjustment fits down into the current worldview of the grain supply.

On subsequent perspective, threaten the uncertain damage of El Nino weather phenomenon and provide fixed rates in the rear dates of the cereals year 2014/15. Further, unforeseeable risks are priced.

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