The USDA´s report published on August 12 showed a record wheat harvest in the Black Sea ,the organisation having taken the upper figure from various production estimates. We feel these high production levels have now been taken on board by the market .
The USDA has also lowered Europe´s wheat production by nine milion tonnes , but in our opinion this is likely to be reduced by a further 7 mt.
The French market has not yet finished its rationing work.France wheat is still more competitive than Baltic Sea wheat , however , so the French market will have to rise against other sources.
Incidentally ,we are still keeping a close eye on fund positions in Chicago .They still have an extremely short position , close to record levels in fact , so we may see some sudden buy-back activity at any moment , even without any fundamental inforrmation .
They key factors to monitor are the state of harvests in Europe and the Black Sea , the competitiveness of UK , and French wheat , together with fund positions .
German cooperatives have reduced their production estimate for the country´s barley production by 1mt compared with last year , to 10.5 mt.
Exports from France and Europe are down , with just one ship being loaded in French ports for thirs countries this week .At European level , the rate at which export certificates were issued fell during the period mid-July to late August .
In monitoring the market ,keep an eye out for export dynamics and the level of barley´s discount to feed wheat .
Rapeseed yields in France have been confirmed as being 12 % to 14 % down at national level , while those in Germany have also fallen .The Association of German Cooperatives has revised its estimate for the country´s rapeseed production down sharply . to 4.46 mt compared with 4.94 mt last July .This is in line with our 4.49 mt estimate .
In England , however , the situation does not appear to be as disastrous as forecast .The market consensus for Europe ´s rapeseed production is looking incresingly at a level of 19-20 mt.
At the same time , the Black Sea´s rapeseed harvest is making progress , with yields which are still good even though the spread with last year is falling .
In Canada , crops are still in fine condition .The good production levels in the Black Sea and Canada should allow a reasonable level of exports to be guaranteed ,particulary to Europe in order to offset the production deficit .At € 52/t ,the Euronext rapeseed /Winnipeg canola spread is currently favourable for European imports.
We must not forget the competition created by Chinese demand .Incidentally , at least one shipload of Canadian canola is thought to have been sold to China over the last few days .Lastly ,the sharp rally on oils since the beginning of August , with palm oil up by 22 % and soya oil by 11.4 % , is likely to boost demand for rapeseed and support prices .
You should monitor rapeseed harvests in the European Union and Black Sea , crop condition in Canada and the rally in oils .