Contrasting soil moisture picture between East and Western Europe: Grain Market Daily

Tuesday, 31 December 2019

Market Commentary

  • According to Reuters, the US-China ‘phase one’ trade deal is expected to be signed in the next week. Chicago soyabean futures (nearby) have been on a rise since the start of December as a trade deal between the two countries became clearer, rising $24.60/t since 2 December to close at $344.47/t yesterday. This rise has helped to support Paris rapeseed futures (nearby), which have increased €24.75/t over the same period, to close at €412.75/t yesterday.
  • Since 2 December, new crop UK feed wheat futures (Nov-20) have risen £5.85/t, to close at £162.60/t yesterday. Since late October, ongoing planting difficulties in the UK and Western Europe have supported a rise in new crop UK wheat futures. In addition, the US-China deal has supported US wheat futures, with this movement filtering through to Paris and UK markets.

Contrasting soil moisture picture between East and Western Europe

Looking forward into the new year, an important focus for new crop prospects will be weather related news and its effect on crop conditions.

A wet autumn for much of Western Europe has resulted in surface and subsurface soil moistures at surplus levels. Above average rainfall has meant in some areas across Europe, winter wheat planted areas have recorded declines. European soft wheat plantings are estimated to be down 2.5% from last year, according to Strategie Grains. The concern is that surplus soil moisture will affect the condition of planted crops. Declines to the condition of French soft wheat were seen in the FranceAgriMer report earlier this month. The crop was at a 73% good-excellent rating, down from 82% for the same period last year.

A contrasting picture is seen for Eastern Europe, which experienced a drier than average autumn. Abnormally warm temperatures for November and December have prevented the ‘traditional’ snow covering from forming, which protects winter crops from freezing temperatures. However so far this winter, soil temperatures have stayed above the risk level for frost-kill, according to UkrAgroConsult. In the short term, significant cold weather events could affect the exposed crop.

Final estimates for the Ukrainian planted area were published earlier this week. Winter barley and winter rapeseed both saw increases in area, up 3.9% and 0.3% respectively, while the winter wheat area was down 0.6% to 6.4Mha.

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