Reuters Insider - Inside the News: Grain Prices to Be Higher in 2011: BarCap
13/06/2016 11:01
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Description: Grain prices are expected to be tight in early
2011 due to persistent weather-related production
downgrades, low stocks and a recovery in demand,
says Sudakshina Unnikrishnan of Barclays Capital.
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Transcript (May be auto-generated)
It's 1500 GMT. The yearend stock rally continues on both sides of the Atlantic,
gains limited though by continued Euro zone debt fears and tensions on the
Korean Peninsula. Wall Street begins the week where it left off, stocks opened
higher looking to extend three weeks of gains as M&A activity boost optimism.
European stocks also rising in thin trade. Mining shares buoyant on the back of
higher metals prices. The FTSEurofirst 300 up over 1% to levels not seen since
the collapse of Lehman Brothers. The Euro zone's debt worries persist though.
French 5-year CDS rise to a record high. Data monitor markets, says
unsubstantiated rumors of a downgrade are floating around. Moody's meanwhile has
just downgraded Irish banks following its sovereign downgrade on Friday. And
debt unease pushes the Euro to an all-time low against the Swiss Franc and the
Aussie Dollar. In commodities news, ICE raw sugar futures have touched a fresh
30-year high on fund buying the price supported by persistent Australia rainfall
and modest Indian exports. And Russia may extend its grain exports ban beyond
July 1 next year. That's according to the head of the country's powerful grain
lobby. Delayed fertilizer deliveries are putting spring crops at risk,
threatening the harvest. Well Barclays Capital Commodities Analyst Sudakshina
Unnikrishnan joins me now. Many thanks indeed for joining us so. So how would
this of affect the global balance of the grain market? No, I think the news from
Russia overnight about a potential extension to the grain export ban, I think it
is likely to continue to lead to the sort of environment that we've been seeing
in place pretty much since the summer. So we would expect that the current news
adds a bit more further tightening to a balance which is already facing a lot of
problems, whether it be in the form of excess rainfall in parts of Australia
especially in Eastern Australia. The fact that we've had a pretty lower level of
plantings for winter wheat crops in the FSU as well as the issue of much lower
than expected level of US yields for corn. So I think global grains balances had
tightened a lot. So what's going to be the impact on grain prices, Sudakshina?
No, I think in fact it's likely to be not as dramatic as what we saw this summer
when we had CBOT wheat prices rising as high $8.41 per bushel. But we would
expect that the uptrend in grain prices remains in place. We have a quarterly
average off by $6.9 for next year for wheat and $5.94 for corn. So we would
expect that these persistent weather-related production downgrades, low stocks
and the recovery in demand especially in ethanol production lead to a very tight
grains balance especially for the first half for next year. Okay Sudakshina,
many thanks indeed for that. Now the big freeze continues to cause travel chaos
across Northern Europe.
More than 1,000 flights have been cancelled out of Frankfurt, Munich and Berlin.
Tens of thousands of passengers have been stranded in London as Heathrow's only
operating one of its two runways. The Eurostar line between London, Paris and
Brussels is also disrupted. Rabobank's Jane Foley says further bad weather could
impact the economy. We have had over the weekend quite serious reports of
retailers in the UK being affected. This morning we've seen BA shares sell-off
because obviously we've had closures over the weekend in airports and nobody
knows if that will continue into this week.
So the prospects could be quite serious potentially. Travel disruption also in
New York. Newark airport's Terminal A was shut for more than half an hour
earlier because of a suspicious package. Passengers are now being allowed back
in after officials discovered the package contained a computer monitor. Tensions
easing for now on the Korean Peninsula after North Korea says it won't react to
what it calls reckless military drills by the South. A diplomatic breakthrough
could also be on the cards after a report that the North has told US
troubleshooter Bill Richardson that it will agree to the return of nuclear
inspectors. Well that's it for now. Stay with us for updates on the hour. I'm
Darcy Lambton. This is Reuters