Old - new crop - what could be otherwise?

Experiences from the 2014/15 - conclusions for 2015/16 market history

The engineer year 2014/15 comes to an end. Fundamental changes of the current developments are not more are expected, but cannot be ruled out. That will eventually be forthcoming months by the so-called weather markets with implications for the coming year marked.

The global supply situation in 2014/15 can be used as well on average are classified. The supply benchmark is calculated "stock to use ratio" to 21.6%, slightly higher than the multiyear average of 20.3%.  As a result, the average price level would have to be slightly below the long-term prices. But there were year-specific factors that have caused substantial fluctuations in the grain market.

A worldwide record harvest had pressured strong grain prices in the harvest and post-harvest time . Prices fell below the multi-annual average. The high proportion of feed wheat, which pushed down the already well supplied feed grain market at a low price level put a special accent. The qualities of bread grain could not evade initially this Undertow. The prices between the quality levels strutted wing apart abnormally.

Starting Oct. by 2015, there was a strong increase in prices in all categories. This development was triggered by increasing import demand for quality grain. The declining value of the euro as a reinforcing factor contributed to favorable conditions of competition for the EU cereal exports was added for the euro area countries. Ultimately, the export-limiting Russian export tax favoured the export business of the EU. The culmination of price was exceeded at the turn of the year.

Grain prices were consistently plummeting since beginning of the year 2015 . The fears of a possible supply shortage and the risk assessments of new harvest proved during this period little reason. After a small interim high in April the first forecasts for the harvest provided a reassuring assessment of the coming supply situation 2015/16 consisting of from high surplus stocks with something smaller. but still good average harvest results.

From mid-May was there with the downturn to end. The favorable harvest forecasts were first cracks. For that crop year is 2015/16 with 80 to 90% probability of an El Nino-out year. After the long experience of previous decades, the weather phenomenon will lead to considerable drawbacks in terms of growth and in the harvest of global cereal production. The Pacific region where the weather anomaly is mainly happening is particularly affected.

For Eastern Australia severe drought can be expected will be, when El Nino should present in full strength. In India, the much-needed monsoon rains will be late and inadequate. In Indonesia, the insufficient rainfall primarily concerns the palm oil production.

The main wheat growing areas in the southern part of Russia could also be affected by insufficient rainfall during the crucial harvest months June/July 2015.    

Count (to) lots of rain to the southwestern part of the United States . Such a development reduces not only the amount of harvest the grain quality especially in the wheat cultivation area. 

Also must be calculated with above-average rainfall in Argentina and the southeastern parts of Brazil . It remains open whether or not the rainfall reach harmful proportions. However, the northeastern part will suffer because experience has shown that Brazil drought.

The intensity of the weather phenomenon is different each time out. Therefore, the effects are also difficult to calculate.

Following findings should apply to the cereals year 2015/16:

  1. High initial stocks provide a good cushion for the case of small crop failures.
  2. The crops estimated so far at a good average level can easily in the drop down area of below-average results.
  3. Essential larger sign of risk than in the past year is the ultimate harvest and supply situation by 2015/16.
  4. The Preisschwankungen can be larger in addition to the supply dependency also through political and economic and financial factors such as trade restrictions and exchange rate changes. While a higher than the current level of prices is more likely than vice versa.
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