23.
05.14
Falling wheat prices - for how long?

Getreide Cockpit, 23.05.2014

Bullish
  • Future uncertainties about the crop output
  • Weather anomaly El Nino with different effects
  • Wiiterungsbedingte, political and financial risks in the Black Sea region
Bearish
  • Relaxation of supply to the front dates
  • Rainfall in the United States
  • Budget forecasts for the EU; with a question mark for the Black Sea region

Forward prices for wheat in Chicago and Paris

Converted into € je

Jul 14

Separate 14

Nov 14

Jan 15

March 15

Wheat, Paris

-

-

198.00

198,25

198,50

Wheat, Chicago

176,85

179,73

Dec. 14: 184,63

189,19

Weizenpreise continue on Valley trip - but probably not

Wheat prices on the leading stock exchanges show a clear decreasing tendencyincluding July 2014. The mounting rainfall so far to dry U.S. wheat area and cheap growth weather for the U.S. spring wheat seed are drive motor. The prospect of a better than previously expected poor harvest drive the prices down.

Forecasts of slightly rising harvest estimates from the European Union and with caveats from the Black Sea region contribute to the assessment of a future balanced supply situation. Even from the Asian area of India and China, the positive mood despite El Nino is unbroken warning.

But striking when taking a closer look, that exhibit the declines at the latest when the Aug-14 date to stop and either into a stable sideways movement as in Paris or even rising trends like in Chicago.

This perspective allows the justified assumption, the current listing decreases not lasting will be, but are looking for a reasonable platform for the future supply situation.

As the previous estimates results good averagebalance of future grain, also if this year's harvest to fall 2014/15 behind the strong previous year.

The recent evidence of looming below-average harvests in the Ukraine and Russia are not yet sufficiently secured, to provide a sufficient countervailing force for price developments. Also the possible El Nino damage in Australia and other SO Asian countries are still too uncertain and too far away to have advance effects. However, both of these factors sufficient to drive the risk premium of the late forward rates upwards.

An early and good harvest is emerging in Europe . The sellers keep therefore for the time being covered in the safe position, that the need for connection is covered. Poker will stop a certain amount of time before the scramble for the better starting blocks.

Of particular importance, the EU wheat exports will be in the coming financial year because the United States have to scroll quite a failure, and the Black Sea region are not very large offering. For the EU in world trade greater penetrate and occupy the leading position in the case of wheat. This should help in this country and perhaps more in the course of autumn at rising export demand course fixtures.

Falling wheat prices - for how long?
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ZMP Live Expert Opinion

Relax is the strong fears to a disastrous winter wheat harvest in the United States. The timely U.S. corn seeding reduces the risk assessment. Good prospects for an early and above-average harvest in the EU contribute to the price reduction. Thereby, the front dates are particularly affected.

The future forward rates indicate at least solid rise to slightly engineer year 2014/15. Thus, risk premiums with regard to a general uncertainty about future crop outputs, the fears of El Nino effects and the multiple instabilities in the Black Sea region be reflected.

The EU will grow increasingly in the role of the global export leader in the wheat market. Great expectations of rising EU exports have a high harvest 2014 in the light of the supply situation very quickly look. This perspective for the pricing will emerge only stronger in the further course of the marketing year.

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