Wheat in Australia’s top grain growing state became – briefly – the world’s priciest, as expectations for the newly-started harvest took a further hit, and underpinning forecasts of a sharp drop in exports.
A price of Aus$330.00 a tonne hit by Western Australia wheat futures – equivalent to $340.00 a tonne, or $9.25 a bushel – meant the grain "is now the most expensive in the world", Commonwealth Bank of Australia analyst Luke Mathews said.
In fact, a rise in Minneapolis wheat, high protein, in early deals on Wednesday to $9.30 a bushel ($341 a tonne) reaffirmed its place as among the world’s dearest on traded markets, ahead too of the E258.00 ($338) a tonne at which Paris wheat for November was trading, or E256.60 a tonne for January delivery.
The rise in Western Australian wheat prices to some $40 a tonne ahead of the value of east coast supplies came amid fresh market ruminations over the competitiveness of supplies from different origins, as Egypt’s state grain authority flagged a lack of clarity over offers of Black Sea grain.
Ukraine grain traders have stockpiled 540,000 tonnes of wheat for export, in addition to the 3m tonnes shipped already in 2012-13, for fear of government trade curbs to protect domestic supplies, Kiev-based consultancy ProAgro said.
‘Declining production prospects’
However, prices of Western Australian wheat are being elevated by ideas of further yield damage to dry weather, after key early-October period which represented the last chance for crop revival passed without the rains needed to boost grain fill.
"The strength in Western Australian wheat is related to declining production prospects," Mr Mathews said.
"Minimal rainfall has been recorded through the Western Australian wheatbelt in October, resulting in further reductions in yield potentials."
Some analysts "are now talking about a 5.5m-6.0m tonne Western Australian wheat crop", well below the CBA forecast of 7m tonnes, and the 11.7m tonnes achieved last year, he added.
‘Yield estimates reduced’
A harvest at the lower levels being suggested would likely see Western Australia surrender its title as the country’s top wheat growing state, with the New South Wales crop pegged by state officials at 6.88m tonnes.
And the weakening harvest prospects, and high prices, come at a time of lowered expectations for Australia’s wheat exports in the newly-started 2012-13 season, with the US Department of Agriculture last week slashing its estimate to 18.0m tonnes, a 28% drop year on year.
Separately, ideas of further damage to Western Australian crops were supported by a 45,000-tonne downgrade, to 860,500 tonnes, by the Australian Oilseeds Federation to its estimate for the state’s canola harvest.
"While crops in the north have fared better than initially anticipated, crops in the southern areas have had yield estimates reduced," thanks to "poor" rains, the federation said.
The group made a small upgrade, to 2.74m tonnes, in its estimate of the total Australian crop, reflecting "well-needed rains" in many areas.
Statistics: Posted by yoda — Wed Oct 17, 2012 11:58 am
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Oil World downgrades Argentine soybean crop, again
Oil World has, for a fourth successive week, cut its forecast for the soybean crop in Argentina, extending the run of downgrades to a crop hurt by both frost and drought.
The influential analysis group downgraded by 1.5m tonnes to 41.0m tonnes its estimate for the 2011-12 harvest in the third-ranked exporter of the oilseed.
The revision, which puts an 8.2m-tonne drop from last season on the cards, takes to 4.0m tonnes Oil World’s total downgrades to the crop over the last month.
And it extends a trend which has seen some observers come up with even smaller forecasts.
"The market is still trying to dial in a shrinking Argentine crop. Some estimates now have the crop below 40m tonnes," broker US Commodities said.
Michael Cordonnier at Soybean and Corn Advisor said: "The Argentine soybean production continues to decline on nearly a weekly basis due to late season dryness in northern Argentina and cold weather and patchy frosts in southern Argentina."
More downgrades to come?
Indeed, further downgrades may be yet to come, to judge by comparison with 2008-09, when Argentina last suffered a drought-dented harvest.
Then, the US Department of Agriculture, whose data represent world benchmarks, in 2009 cut its forecast for the Argentine harvest into June, by a total of 7.0m tonnes from April.
Soy bean production in neighbouring Brazil may also be due further downgrades, although with the harvest just about finished, there is less scope for cuts.
Oil World said that it may reduce its estimate for the Brazilian crop by 500,000 tonnes to 65.0m tonnes.
Buyers switch to US
The German-based group restated forecasts that the disappointing South American harvests would boost demand for soybeans from the US, the biggest exporter.
"With South American supplies dwindling, world demand for soybeans and products will increasingly shift to US origin from June and July onward it," Oil World said.
Such a trend "will limit the downward potential of soybean and product prices in the near-to-medium term".
Statistics: Posted by yoda — Tue May 08, 2012 12:48 pm
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Oil World cut its forecast for South American soybean production, extending the run of downgrades amid ideas that rains in the last two weeks have been insufficient to put a hold on crop losses.
The influential analysis group trimmed its estimate for the Brazilian harvest by 500,000 tonnes to 69.5m tonnes.
The downgrade put it in line with a 69.2m-tonne estimate from Conab, Brazil’s official crop bureau, last but below the 72.0m tonnes forecast by the US Department of Agriculture, whose data set world benchmarks.
And Oil World slashed by 1.4m tonnes to 4.6m tonnes its forecast for the harvest in Paraguay, the world’s fourth-ranked exporter of the oilseed, which the USDA sees producing 6.4m tonnes.
"[There was] very little rainfall received in southern Brazil, Paraguay, Uruguay and Argentina yesterday and very little expected in the next few days, further stressing developing soybeans and other crops," the German-based group said.
The downgrades more than offset a 500,000-tonne lift, to 47m tonnes, in Oil World’s forecast for the Argentine soybean harvest.
‘Bad and fast growing worse’
The comments cast doubt on hopes that improved rains for some areas, such as central Argentina, which received "moderate but scattered showers" on Monday according to WxRisk.com, can reverse the spate of South American crop downgrades.
The Australian Bureau of Meteorology said that the La Nina weather pattern blamed for weather extremes in South America, and elsewhere, "showed some signs of weakening over the past fortnight as the tropical Pacific Ocean warmed".
However, the La Nina is to retain climatological influence "over the coming months".
Martell Crop Projections said that "intense heat and dryness is persisting in south Brazil soybean states Parana and Rio Grande do Sul", where soybean potential was "bad and fast growing worse with little rain in the forecast".
While Argentina’s central grain belt may receive "extremely heavy soaking rains" this weekend, "south Brazil continues to struggle with only light and scattered rain".
USDA officials said on Friday that rains was "urgently needed" in Rio Grande do Sul "to ease the stress" on soybeans.
Further north, in central Brazil, too much rain has been a problem for much of the season, raising fears for the spread of rust, a concern which Oil World also highlighted on Tuesday.
A recent drier spell has enabled growers to press on with harvesting, getting more than 13% of soybean crops in the silo last week alone in the top producing state of Mato Grosso, to bring the total completed to 24.3%.
"The climate was favourable to fieldwork," FCStone’s Brazil division said.
However, the broker added that "the weather forecast for the next five days indicates rain… which may damage the soybean harvest"
Statistics: Posted by yoda — Tue Feb 14, 2012 2:57 pm
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