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Global wheat markets firmed up yesterday, London closed up £1.25 but fundamentals remain bearish.
Latest UK wheat numbers from Defra suggest domestic usage has reduced and production slightly increased. It has been reported that by the end of March, 2 million tonnes (?) will have been exported, leaving 1.5-2 mmt for end of season exports; although current £12.50 May – November spread is an incentive to hold.
UN predicts 723 mmt wheat crop for 2016 (most other forecasts c. 708 mmt), 2015 crop has been reduced by 3.8 mmt to 733 mmt.
US wheat markets are up partly due to dry warm weather in plains, but more likely short covering, funds are nervous about any bullish news with historic short position.
Some weather / crop reports appearing:
Ukraine wheat down 28% but this maybe ‘worst case scenario’ and weather through to harvest could boost yields.
Morocco, Africa’s number 2 wheat nation, may need to double imports to 4.76 mmt due to drought (benefit French exports).
Indian government projects 93.8 mmt harvest above trade estimates of 82-89 mmt, but imports maybe required.
French and Russian crops look potentially good.
Grain markets helped by weaker $ and Brazilian real surged as president Rouseff is facing possible corruption charges (reducing their exports) .
EU wheat getting cheaper compared to EU corn, this is increasing demand prospects for wheat.author: Joe Beardshaw