Arable Market Report - 13 June 2022
Monday, 13 June 2022
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
Grains
The dials in this report reflect the analyst’s view of the possible direction in markets. The two-week (solid line) and six-month (dashed line) outlooks are based on the best available information at the time of writing. Please note, these views do not constitute trading advice and direction of markets may change due to new information since the time of writing.
Wheat
Maize
Barley
Worries over Ukrainian export volumes keep global prices supported for the moment. With EU and US harvests approaching, weather conditions remain a watchpoint.
Black Sea export potential causes volatility to current prices. As a deal looks less likely, global supply remains tight with particularly strong demand in the EU.
Domestic prices remain firm currently. The UK forecast to have the lowest closing stocks in nearly a decade, so barley tracking global grain market movements.
Global grain markets
Global grain futures
Global wheat prices saw continued volatility over the course of last week. The prospect of a potential grain corridor out of the Black Sea led to prices softening at the beginning of the week. However, as the week went on, the deal started to look less optimistic, driving prices up again. The Chicago wheat (Dec-22) futures contract recorded a $12.86/t increase across the week, closing at $403.41/t on Friday. Paris wheat (Dec-22) followed suit, closing at €385.50/t on Friday, up €12.25 over the same period.
While a deal with Russia is looking more unlikely, Ukraine is continuing to try and exploit alternative ways of getting some grain out of the country. Over the weekend, it was reported that the country had established routes out of Romania and Poland, and that there are talks with Baltic states to set up a third export channel. This will be a watchpoint, as we could see prices soften if realised.
The USDA World Agricultural Supply and Demand Estimates (WASDE) were released on Friday. Overall wheat supplies were cut by 1.7Mt, mainly due to India’s spring drought. New crop (2022/23) wheat production was revised down 1.4Mt. World wheat consumption was also down slightly, by 1.5Mt, from May’s estimates.
Maize production is 5.5Mt higher for Ukraine due to a higher area planted than previously expected. The country’s total production is now an estimated 25Mt. However, Ukraine’s export figure remained the same as May’s, at 9Mt.
Barley production was lowered for the EU as expected. Forecasts were down 800Kt, now estimated at 51.7Mt, mainly based on cuts to Spain and France’s production estimates. Australia and Ukraine also saw barley production down due to area declines. These downward revisions could exacerbate global tightness if realised.
UK focus
Delivered cereals
Domestic prices went in the opposite direction to the global market. Nearby UK feed wheat futures (Jul-22) closed at £294.90/t on Friday, down £11.50/t across the week. The new crop contract (Nov-22) did the same, down £11.50/t to close at £306.00/t on Friday.
Delivered prices saw a decline over the last couple of weeks (no delivered prices were published on the 2 June due to the bank holiday). Feed wheat into East Anglia (Nov-22 delivery) was quoted at £302.50/t on Thursday, down £19.00/t from two weeks before. Bread wheat prices into the North West (Nov-22), were quoted at £368.00/t, down £21.00/t over the same period.
Oilseeds
Rapeseed
Soyabeans
Rapeseed markets should remain elevated in the short-term from lack of global supplies. Longer-term, focus will be on the upcoming EU-27 harvest and Canadian crop conditions over the summer; global production is expected to increase for 2022/23.
Strong demand for US origin soyabeans is keeping the market supported, despite South American harvests’ finishing up. The current watchpoint is US weather over the coming months for the 2022/23 crop. Longer-term, global ending stocks currently set to increase.
Global oilseed markets
Global oilseed futures
Support was felt across the week for Chicago soyabeans futures (Nov-22). The contract closed Friday at $576.18/t, up 2.7% across the week, setting a contract high on Thursday 09 June.
Prices on Friday ended slightly down on Thursday’s high from profit-taking. This is after the soaring rally off the back of strong US exports and tightening US closing stocks for 2021/22.
June’s report estimates US beginning stocks for 2022/23 to reduce by 817Kt, due to an increase in US exports for the 2021/22 marketing year over a reduced export forecast for Brazil (-500Kt). With usage unchanged for 2022/23, US soyabean ending stocks are projected at 7.6Mt for 2022/23, lower than average trade expectations of 8.4Mt.
Despite this, global ending stocks for the 2022/23 marketing year are set to increase to 100.46Mt, higher than trade expectations. However, all eyes will now be fixed onto US summer weather as the crop develops.
In other oil news, Indonesia has approved exports permits for 1.16Mt of palm oil products, which will be exported by the end of July. This new programme will aim to accelerate shipments of palm oil after their three-week long export ban. Malaysian palm oil futures (Sep-22) were down 8.3% across the week from this announcement.
Rapeseed focus
UK delivered oilseed prices
Paris rapeseed futures (Nov-22) closed Friday at €783.75/t, up €13.00/t across the week.
Delivered rapeseed (Into Erith, Hvst-22) were quoted at £655.50/t on Friday, with no comparison on weekly movements. Nov-22 and Feb-23 were quoted at £663.00/t and £666.00/t, respectively.
The latest data released from ABARES shows that every Australian state will increase in canola area for 2022/23. However, production is estimated to be 5.6Mt, down from 2021/22 bumper crop of 6.5Mt.
Northern Ireland
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