Written Commentary
London Wheat Report
Source: FutureSource
A very mixed day on markets to kick off the week. Egypt’s GASC tender confirmed that all 428kt of wheat purchased in the latest tender was Black Sea origin – Ukrainian, Russian and Romanian – no French wheat to be seen. Freight rates were supposedly the killer there out of Rouen if market chat is to be believed. Receding threat of the Russia/Ukraine situation combined with the success of Russian wheat in Egypt’s tender alongside the bearish tones in Chicago wheat smashed Matif wheat down further with Mar-22 settling down €12.75 on Friday at €266/t as a result. Sovecon also increased its forecast for Russian 2021/22 wheat exports, increasing them by 200kt to 34.3Mmt in the current 2021/22 marketing season which ends June 30th. Market chatter circling from China questioning China’s grain stocks and current state of grain stocks management. Elements of political influence, corruption and mismanagement all tie into the Chinese feed grains story that has been unfolding for the last year could be coming to light. Cofco and Sinograin have also kicked off the long anticipated overhaul of how both key Chinese state owned commodity giants operate with two joint ventures being set up. First will be a grain storage business controlled by Sinograin and the second for oilseed crushing and processing will be managed by Cofco. Plan to create an entity that can compete directly against Cargill/ADM/LD/Bunge. China now on holiday for Chinese New Year with Chinese futures markets closed until 7th February. Market anticipation they will be returning post hols with their buying boots firmly on.
South America continues to dominate headlines with the weather factor. Ag Rural cut Brazilian soybean outlook to 128.5Mmt from 133.4Mmt in the previous projection. Move comes due to lower yields expected for Brazil’s southernmost states which were battered by dry and hot weather recently. Strategie grains increased its monthly EU forecast for new crop rapeseed harvest, increasing it by 200kt to 18.2Mmt from 18mmt in its latest oilseed report. Estimate would now be 7.4% above 2021’s output of 16.95Mmt. Matif Feb-22 rapeseed got squeezed earlier today, hitting a trading high of €801/t before settling back down at €755/t.
Managed money increased longs today in CBOT corn. March
Chicago corn hit new highs overnight before being pushed lower in the main
session. Market chatter that corn is overbought with a large long fund position
being a concern for when they decide to liquidate, no telling currently how
long new players will be willing to hold the bag.
Contact the ADMISI Grains and Oilseeds Derivatives Brokerage team
Hanne Bell, Ryan Easterbrook, Dominic Enston, Aaron Stockley-Isted
Phone: +44 (0)20 7716 8477 or +44 (0)20 7716 8140 Email: intl.grains@admisi.com
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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