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Macquarie Agri-View
June „11 grain & oilseed update
Feature article
In this report, we highlight our current view of the global grain and oilseed
complex and underline our expectations of the forthcoming USDA WASDE
report. The dominant trends of the last month have been concerns over US
corn plantings, continued weather woes in Europe, delayed spring wheat
planting in North America, and the announcement that Russia will export grain
once again.
Latest news
Corn: Corn planting progress has reached 94% completed in the US. The
improved weather conditions over recent weeks have allowed US farmers to
make significant progress. Concerns over planting progress led to a volatile
month for corn, with benchmark CBOT corn futures trading through a 95 cent
range, up 4.2% on the month. As conditions improved on the US Eastern
Corn Belt, concern is now being raised about potential flooding from the
Missouri river through the Western belt. Improved weather conditions across
the worst effected states allowed plantings – but the seed bed was certainly
not optimal. These concerns mean risk premium will be embedded in the
market for longer. Consumers have been willing to support prices at the
current levels. Yesterday the USDA announced the sale 822,960t of US corn
to Mexico for delivery in 11/12 and 12/13.
Wheat: The announcement that the Russian export ban will be removed at
the beginning of July calmed the market fears that were being stoked by the
continued drought conditions in Europe and delayed North American Spring
plantings. Since the Russian announcement, benchmark CBOT wheat futures
have fallen 8.5% and EURONEXT MATIF wheat futures fell 7.5%. There does
remain some apprehension to potential Russia exports; concern is drawn to
possible quality issues as well as the potential introduction of restrictions later
in the season. These concerns were reflected in the recent tender by Algeria,
a major importer, which didn‟t seek offers from Russian origin. Instead, the
tender was completed for 600,000 to 650,000 tonnes optional origin, which
will likely be French.
Soybean: The soybean markets have remained subdued and continued to
trade in a sideways pattern. Benchmark CBOT Soybean futures traded 1.3%
higher on the month. Soybean planting progress lags historical rates. With
only 68% complete, this is causing some concern. Our view is that there
remains time to catch up and that restrained demand is the overwhelming
story. This will be likely to change in the medium term as Chinese veg oil price
restrictions are lifted. In the oilseed complex far more constructive dynamics
exist in the rapeseed market with prolonged issues in the world‟s top
producers. Oilworld recently downgraded its EU-27 estimate to 19.2mt vs the
USDA at 20mt, and UkrAgroConsult dropped Ukraine rapeseed production to
1.59mt from early estimates of 2mt on the back of higher winter kill than
expected.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Macquarie Agri-View
June „11 grain & oilseed update
Feature article
In this report, we highlight our current view of the global grain and oilseed
complex and underline our expectations of the forthcoming USDA WASDE
report. The dominant trends of the last month have been concerns over US
corn plantings, continued weather woes in Europe, delayed spring wheat
planting in North America, and the announcement that Russia will export grain
once again.
Latest news
Corn: Corn planting progress has reached 94% completed in the US. The
improved weather conditions over recent weeks have allowed US farmers to
make significant progress. Concerns over planting progress led to a volatile
month for corn, with benchmark CBOT corn futures trading through a 95 cent
range, up 4.2% on the month. As conditions improved on the US Eastern
Corn Belt, concern is now being raised about potential flooding from the
Missouri river through the Western belt. Improved weather conditions across
the worst effected states allowed plantings – but the seed bed was certainly
not optimal. These concerns mean risk premium will be embedded in the
market for longer. Consumers have been willing to support prices at the
current levels. Yesterday the USDA announced the sale 822,960t of US corn
to Mexico for delivery in 11/12 and 12/13.
Wheat: The announcement that the Russian export ban will be removed at
the beginning of July calmed the market fears that were being stoked by the
continued drought conditions in Europe and delayed North American Spring
plantings. Since the Russian announcement, benchmark CBOT wheat futures
have fallen 8.5% and EURONEXT MATIF wheat futures fell 7.5%. There does
remain some apprehension to potential Russia exports; concern is drawn to
possible quality issues as well as the potential introduction of restrictions later
in the season. These concerns were reflected in the recent tender by Algeria,
a major importer, which didn‟t seek offers from Russian origin. Instead, the
tender was completed for 600,000 to 650,000 tonnes optional origin, which
will likely be French.
Soybean: The soybean markets have remained subdued and continued to
trade in a sideways pattern. Benchmark CBOT Soybean futures traded 1.3%
higher on the month. Soybean planting progress lags historical rates. With
only 68% complete, this is causing some concern. Our view is that there
remains time to catch up and that restrained demand is the overwhelming
story. This will be likely to change in the medium term as Chinese veg oil price
restrictions are lifted. In the oilseed complex far more constructive dynamics
exist in the rapeseed market with prolonged issues in the world‟s top
producers. Oilworld recently downgraded its EU-27 estimate to 19.2mt vs the
USDA at 20mt, and UkrAgroConsult dropped Ukraine rapeseed production to
1.59mt from early estimates of 2mt on the back of higher winter kill than
expected.
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