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.
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.
20 January 2020
Domestically, the spread between old and new crop UK futures has narrowed as dry conditions have allowed drilling to resume.
13 January 2020
The planted area for US winter wheat is the smallest since 1910 at just 12,466Kha, providing additional support for global wheat markets.
6 January 2020
Although global wheat supply remains supported, adverse crop condition reports from the US and Black Sea have lifted markets.
30 December 2019
US wheat markets continue to find support from a US-China trade deal as hopes rise for increased purchases from China. This has supported most other wheat markets too.
23 December 2019
Global maize markets also bounced due to US- China trade deal announcements. Further support could come as the dry conditions in South America are forecast to continue.
16 December 2019
US maize futures (May-20) gained $2.17/t last week, to close on Friday at $152.76/t, the highest since mid-November.
9 December 2019
While concerns regarding new crop wheat planting have provided support to domestic markets, further gains will now require global markets to also rise.
2 December 2019
There are some global concerns regarding new-crop wheat supply but the 2019 harvest brought high production for the northern hemisphere.
 (credit Gary Naylor photography)-1.jpg?v=637098519970000000)
25 November 2019
Despite short-term worries for some EU crops, global wheat supplies are ample for 2019/20 and area forecast to increase 1% globally in 2020/21.
18 November 2019
Although old-crop UK feed wheat futures (May-20) gained just £0.75/t on the week, to close Friday at £152.00/t physical prices rose more.
11 November 2019
Global markets were awaiting the USDA world agricultural supply and demand estimates (WASDE) report last week, released on Friday.
4 November 2019
Old-crop wheat markets drifted over the week for both US and UK. The downgrade of Australian production could be dropped further as harvest commences and yields are confirmed.
28 October 2019
Downward revisions to Argentina and Australia production in 2019/20 have led to a tightening of global supply and demand.
21 October 2019
Weather has continued to dominate global markets with wet and cold weather in the northern hemisphere and predominantly dry weather in the southern hemisphere.
14 October 2019
Further cuts to Australian wheat production, and increasingly poor outlooks for Southern Hemisphere production have been reducing the size of the forecast global surplus.