Market Report - May 2013

Posted 06 May 2013

"Wheat prices fell in March on signs of a recovering global supply"

EXCHANGE RATES

Against the $, Sterling opened the month at 1.50 and is up at 1.53 as at 11th April, largely due to improved UK data.
Against the €, Sterling opened the month at 1.151 and ended much higher at 1.173 as at 11th April following the Cyprus financial situation.

CRUDE OIL

Brent crude oil was down slightly on ICE London as deteriorating economic sentiment in the Eurozone prompted concerns about demand growth. Fuel prices trended lower in March with EU petrol down 6% and EU diesel down by 1%.

FATS AND OILS

Soyabean oil rose in Rotterdam by 3%, supported by strong global demand, driven by China. World consumption of soyabean oil for 2012/13 is expected to exceed production for the first time in four seasons, rising 4% to 43.3m tonnes, while production is set to rise 2% to 43.2m tonnes. However, soyabean oil prices fell in Argentina by 4% weighed down by the start of the South American harvest. Despite ample global supply, palm oil was steady, unchanged in Rotterdam as the current low price of palm oil resulted in higher demand from the international market. However, prices fell in Malaysia by 5% due to an upward revision to the production forecasts.

Sunflower oil fell in Rotterdam by 1%, while rapeseed oil was up 2%. Spot prices for extra virgin olive oil rose in Italy by 2%, but fell in Spain 1%. For lauric oils, coconut oil and PKO eased in Rotterdam but rose slightly in Malaysia.

WHEAT

Wheat prices fell in March on signs of a recovering global supply as the global production forecast for 2012/13 was revised 1.9m tonnes higher this month to 656m tonnes. Milling wheat prices were lower throughout Europe with prices falling on LIFFE Paris by 8%. However, prices were higher in the US on driven by strong export demand. Feed wheat prices were unchanged on LIFFE London.

DAIRY

Dairy prices have risen due to a drought in New Zealand, and winter conditions in Europe causing low stocks at the end of the season. Butter, SMP, Whey powder and WMP prices rose in New Zealand, the US and Europe by around 15%. This situation has, and continues, to worsen by the day as we enter April with manufactures reluctant to sell limited stock at sensible price levels.

Cheddar prices were stable during March but the developing situation on the dairy complex will likely see prices rising once again. Wholesale egg prices fell in the EU, with prices falling slightly in the UK.

INGREDIENTS

Cocoa prices rose on LIFFE by 3% as the world production deficit is expected at 45,000 tonnes. However, this is lower than the markets initially expected. In the UK, cocoa butter prices rose slightly, whilst cocoa powder registered a slight fall.

Philippine desiccated coconut prices ended up 6%.


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