ADMISI London Wheat Report for 15 August

The lower cost of growing soy versus corn, floods in some areas and a quick winter wheat harvest drove the U.S. government to raise its soybean production forecast to a record high this week, farmers and analysts said. A record harvest from the world’s second-biggest soybean producer would contribute to larger supplies of the oilseed, used to make biofuels and livestock feed. Global grains markets are in oversupply after several years of disruption and tight supplies due to the pandemic and then the war in Ukraine. Large corn and soy crops globally, as well as feeble demand from exporters and domestic processors, have driven prices to near four-year lows and led to a rapid decline in U.S. farm income forecasts this year.

The International Grains Council (IGC) has trimmed its forecast for 2024/25 global wheat production driven largely by a downward revision for France which has just endured one of the worst wheat harvests in decades. The inter-governmental body, in its monthly update on Thursday, forecast global wheat output at 799 million metric tons, down from a previous projection of 801 million although still above the prior season’s 794 million. France’s wheat crop was put at 27.5 million tons, down from 31.0 million seen previously and sharply below the prior season’s 36.3 million.

SovEcon have also cut Russian wheat crop production by 1.8 million metric tons (MMT) to 82.9 MMT. The new forecast reflects Rosstat’s lower estimate of planted areas and a decrease in yields in several regions. Rosstat estimated the wheat planted area at 28.5 million hectares (mln ha), compared to 29.8 mln ha the previous year and SovEcon’s estimate of 29.2 mln ha.

With the above news, it would be safe to say the market should have found support, it didn’t. Down down down is the mood of the day. Both Matif and London were trading well down at the close of play.  London had a decent day for volume with over 700 lots crossing the line across the curve. Nov May spread traded out to £15 today. 55 lots traded on that spread between £12 and £15. November was trading at £182 down a whopping £6.65 in the red.