Market Report - 15 July 2019
Monday, 15 July 2019
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
Grains
Wheat
Maize
Barley
Harvest is underway in Europe and the UK. The market looks well supplied, but awaits further yield information. At £132.50/t (FoB, Harvest), UK feed barley is currently export competitive.
Russian and European production forecasts have been revised down, reducing the forecast global surplus. However, production is still forecast at record levels. US maize will continue to influence market direction.
The USDA increased its US production forecast. However, a lack of confidence over the US area, and unfavourable hot and dry forecasts for the US have supported a short-term rally.
Global grain markets
Global grain futures
The US is forecast to be drier and hotter than normal leading to a more bullish, US centric, feel to markets in the short-term.
Chicago maize futures have gained due to the hot and dry adverse weather forecasts. However, the rise could be limited by increased South American maize availability competing for export sales. The Brazilian Safrina maize crop harvest is now forecast at 72.36Mt, 34% larger year-on-year. Total maize production is forecast at 98.5Mt (Conab).
In the latest USDA supply and demand estimates (WASDE), global wheat production for 2019/20 was reduced by 9.4Mt. Russian wheat production was lowered by 3.8Mt to 74.2Mt. Also, after the brief heatwave across Europe, production for the region is forecast at 151.3Mt, down 2.5Mt month-on-month.
Elsewhere, the Ukrainian wheat harvest is progressing well at 37% complete according to UkrAgroConsult, 14% ahead of last year with yields up 0.43t/ha.
UK focus
Delivered cereals
The #AHDBCropTour is now coming to an end. UK cereal crops are in general looking good. However, disease pressure has led to varied yield expectations.
With a larger wheat crop expected, exports will be more important this season. At £143.00/t FoB on 9 July, UK feed wheat is pricing above that of Black Sea origins. Prices may face further pressure, depending upon the size of the harvest. The barley harvest is underway and export prices are competitive. However, Brexit uncertainty will mean that UK feed barley needs to remain price competitive.
Oilseeds
Oilseed Rape
Soyabeans
The picture for EU rapeseed continues to tighten. Reports of low yields and poor oil content in France has pushed prices higher. Furthermore, yields are below last year in Ukraine.
The world outlook has tightened with the reduced US area. Global ending stocks are now forecast at 104.5Mt, down 8.1mt month-on-month. But, stocks remain the second highest on record.
Global oilseed markets
Oilseed markets moved higher last week. Soyabean markets firmed with the US area planted to soyabeans down year-on-year. The combination of reduced area and concern over above average temperatures pushed prices higher.
Last Thursday’s USDA supply and demand estimates (WASDE) highlighted an 8.1Mt reduction in global soyabean stocks. A large amount of the fall in stocks was driven by a 6.8Mt tightening in the US stocks outlook. Despite the cut, global soyabean stocks are still forecast at the second highest level on record.
Oilseed markets have also gained support from increases in the value of crude oil. Ongoing tensions between the West and Iran has resulted in brent crude oil reaching its highest point since the end of May.
Looking ahead, further tightening of oilseed balances could offer support to what is an otherwise well supplied market.
Global oilseed futures
Rapeseed focus
UK delivered oilseed prices
Rapeseed prices (UK physical and EU futures) firmed last week. EU production forecasts continue to reduce. Oilworld estimate that EU rapeseed production could be as low as 17.5Mt (www.Oilworld.biz). This reduced outlook increases the need for EU prices to be at import parity.
French rapeseed yields are being reported at 2.5t/ha to 3t/ha, down on the five year average of 3.2t/ha. The Ukrainian harvest is now 50% complete, yields are forecast at 2.2t/ha, compared with 2.4t/ha last season. Ukrainian rapeseed production is still expected to reach record levels this season. It will be needed to support European shortfalls.
1 June 2020
Crop concerns, especially in Europe, are still one of the driving forces supporting wheat prices currently. Longer-term support for prices depends on harvest confirming how yields have been impacted.
26 May 2020
By and large, global wheat markets were supported last week. The continuation of new crop weather concerns helped Chicago wheat futures (Dec-20) gain 1.7% Friday-Friday, although movement throughout the week varied.
18 May 2020
UK futures ended the week higher in contrast to global markets. Prices fell through the week following the global pattern, but gained at the end of the week as sterling dropped sharply against both the US dollar and euro.
11 May 2020
Weather prospects for European and Black sea wheat remain similar to last week, and provide a somewhat bullish sentiment for markets. Pressures remain in the longer term from a build-up in global wheat stocks.
4 May 2020
27 April 2020
Traditionally, this time of year leaves global markets at the mercy of the weather, especially for new crop production estimates.
22 April 2020
During March, soya meal markets recorded elevated levels of support in the face of coronavirus. Global demand for feed increased, while global availability fell. Countries that had first entered lock-downs experienced large-scale logistical disruptions. Recently, with global soya supply at a high, soya meal prices have since retraced back to pre-March levels. This has provided some respite for the UK livestock industry, which makes use of imports for protein feed sources.
20 April 2020
Maize continues to be under pressure, losing yet more ground last week due to depressed demand for ethanol.
14 April 2020
Grain markets have lost significant ground as a result of Thursday’s USDA Supply and Demand estimates. UK feed wheat futures were down $4.05/t at 2pm today. The move lower has been driven by the increase in ending stocks for both wheat and maize.
6 April 2020
Global wheat futures continued to fall last week before recovering slightly on Friday.
30 March 2020
Global prices continue to be supported by increased levels of demand, though moves in currency markets limited some gains. Wheat markets see sentiment driven support from a proposed Russian grain export limit and an anticipated small US spring wheat area.
23 March 2020
This week's Market Report focuses on the impact of coronavirus and the subsequent currency volatility on grain and oilseed markets.
 (credit Gary Naylor photography)-1.jpg?v=637098519970000000)
16 March 2020
The global fundamental picture is well supplied, although dryness in the Black Sea region will be monitored closely. The domestic market continues to move at, or close to, import parity.
 GNP-1.jpg?v=637007628450000000)
9 March 2020
Global wheat markets continued to fall last week as the potential impact of a global coronavirus pandemic has further weighed on consumption outlooks.
2 March 2020
US grain markets continued to fall last week with UK wheat futures following suit.
24 February 2020
Global wheat prices ended the week slightly up, with news of lower-than-anticipated Australian production figures. However, news of large wheat production figures across Black Sea regions look set to weigh on domestic markets in the longer term.
17 February 2020
In the short term the market is falling on stronger export competition, the longer term picture is still uncertain and dependent on weather in the Black Sea, US and EU.
10 February 2020
Weakness of both sterling and the euro against the dollar has provided recent support to UK and European wheat futures.
3 February 2020
Amid a global downturn in commodities, a surge in US export sales potentially offers longer term price support.
27 January 2020
As Black Sea wheat prices continue to gain, managed money funds have increased their long bullish positions in Chicago wheat, which having provided support, now increases a sell off risk.