Arable Market Report - 13 February 2023

Wheat

Maize

Barley

The escalation of the war between Russia and Ukraine threatens to curb supplies from the Black Sea region in the short-term. Longer-term, the focus turns to weather and impact on new crop conditions.

Maize markets are feeling support from ongoing dry weather in Argentina, though US exports look to have weakened slightly. Longer-term, plentiful South American supplies will also limit any major gains.

Barley prices continue to follow trends in the wider grains complex.

Global grain markets continued to climb last week, as the escalating war between Russia and Ukraine threatened to curb supplies from the Black Sea region. Chicago wheat futures (May-23) were up 3.6% over the week (Friday-Friday). Chicago maize futures (May-23) were up 0.4% over the same period, following the rally in wheat markets, as well as limited rain in Argentina. However, gains in maize markets were capped by sluggish US export demand.

According to Hightower, global grain markets have become accustomed to aggressive exports from Russia and Ukraine over the past few months, but recent escalations are putting the UN-brokered deal at risk (Refinitiv). Russian missiles targeted power facilities on Friday in Ukraine, with Ukrainian officials saying that a long-awaited Russian offensive was underway in the east.

Ukraine’s Agriculture Ministry said this morning that, so far this season, grain exports are at 29.2Mt, down 28.7% on the year (Refinitiv). Last week, the Ministry called for increased minimal tonnage of ships carrying grain and vegetable oil from the country, after accusing Russia of delaying inspections of ships carrying Ukrainian goods. On Thursday, it was reported that a queue of 108 vessels formed in the Bosphorus due to the slowdown in inspections, something to watch moving forward.

While overall global wheat markets climbed last week, prices saw slight losses on Thursday after Stratégie Grains increased the EU wheat crop forecast again. The French consultancy now expects EU soft wheat production to be at 129.7Mt in the 2023/24 season, up from last month’s forecast of 129.3Mt, and if realised, up 3% on the year.

Global maize markets followed the upward movement in wheat markets last week. Maize prices were also supported by the ongoing dry weather in Argentina, and the larger-than-expected cuts to production estimates in the latest WASDE released on Thursday. Looking over the next seven days, while rains are forecast in northern regions of Argentina, the southern parts of key agricultural production regions are still not forecast any rain, which could see some support for prices.

Having said this, any major gains in global maize prices were limited last week as US export demand weakened. The weekly US export data released by the USDA on Thursday showed US maize exports for the week ending 02 February (2022/23), were down 27% on the week at 1.16Mt. Global maize demand will be something to monitor over the next few weeks considering Chinese demand especially.

UK feed wheat futures followed the upward price movement seen in global wheat futures last week. The May-23 contract gained 2.8% (£6.65/t) Friday – Friday, and new crop futures (Nov-23) climbed 3.3% (£7.60/t) over the same period.

Feed wheat delivered into East Anglia (Feb-23 delivery) was quoted at £236.50/t on Thursday, up £6.00/t over the week. Bread wheat delivered into the North West (Feb-23 delivery) was quoted at £316.50/t on Thursday, up £5.50/t over the same period.

On Friday, AHDB published its annual Agri Market Outlook: Winter 2023. The latest Cereals and Oilseeds Agri-Outlooks take stock of the current situation and look forward to what we might expect in the coming months, for supply availability, trade and demand.

AHDB also published the latest HMRC UK trade data on Friday, which includes important information on exports and imports of key commodities, up to December 2022. The UK recorded promising wheat and barley exports, at 144Kt and 117Kt respectively in December.

Rapeseed

Soyabeans

Rapeseed prices will continue to track soyabean and crude oil sentiment short term. Long term the record soyabean crop from Brazil has the potential to pressure prices.

Unfavourable weather in both Argentina and Brazil over the next week has the potential to support soyabeans. Long-term we still have a record South American soyabean crop, regardless of Argentina’s crop revisions.

Chicago soyabean futures (May-23) gained 0.5% across the week to close Friday at $563.41/t. The contract was on track for weekly pressure from technical selling, anxieties over Chinese purchasing following the potential surveillance balloon being shot down by the US, and position squaring ahead of Wednesday’s USDA World Agricultural Supply & Demand Estimate (WASDE). However, the contract gained 1.4% on Friday on the back of the strong soyameal prices, and concerns over continued Argentinian dryness.

There was also slight support on Wednesday, following the WASDE report. In the report, Argentina’s soyabean production was revised to 41Mt, 4.5Mt lower than January’s estimate, and 1.34Mt lower than the average trade estimate in a Refinitiv pre-report poll. However, on Wednesday, the Rosario Grain Exchange slashed their soyabean crop estimate to 34.5Mt, from the 37Mt previously forecast, significantly lower than the USDA’s estimate.

To not sound like a broken record, over this next week focus is still on the Argentinian weather which is set to turn dry again and Buenos Aires will only receive marginal rains on the coast. This could continue some price support.

However, we still have a record Brazilian crop coming to market. Patria AgroNegocios estimate Brazilian soyabean harvest is at 17.4% of the soyabean area as reported on Friday, versus 29.9% at same point last year, delayed from rains. Rains are expected to continue throughout this week, which could impact the plantings of Brazilian off-season maize crop, but this is currently just a watch point.

Driving support in rapeseed prices last week was the support in nearby Brent Crude Oil futures, which gained 8% across the week to close Friday at $86.39/barrel. Paris rapeseed futures (May-23) closed Friday at €550.50/t, gaining €5.25/t across the week.

Delivered rapeseed (into Erith, Feb-23) was quoted at £476.00/t on Friday, down £5.00/t on the Friday before. There was pressure on our domestic market due to the Paris market gaining Friday afternoon, when our survey was conducted mid-morning. Also, sterling strengthened across the week (+1.16%) against the euro. Trading closed Friday at £1 = €1.1292.

The latest HMRC UK trade data, published on Friday saw rapeseed imports at 24.8Kt for December 2022, all EU origin, the second lowest month so far this marketing year. It brings total rapeseed imports for 2022/23 (Jul – Dec) to 431Kt.

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at info@ahdb.org.uk  © Agriculture and Horticulture Development Board. All rights reserved.