Monday, 1 March 2021
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
Old crop rapeseed prices rose sharply again last week, due to tight Canadian and global supplies. May-21 Canadian canola (rapeseed) futures set its highest price to date on Monday and again on Tuesday, before slipping back on later in the week.
EU import demand also remains strong. EU Commission increased its import forecast for this season by 0.5Mt to 6.0Mt.
Old crop UK prices rose sharply last week, following the gains in global markets. Also, sterling weakened slightly against the euro Friday-Friday, adding further support. Between 19 and 26 February, the price for delivered rapeseed (Erith, May-21) rose £17.50/t to £429.50/t. The volatility during the week and limited remaining UK stocks reduced traded volumes.
Smaller gains were reported for new crop (Nov-21) prices. The price for Nov-21 delivery (Erith) rose £4.00/t to £373.00/t on 26 February. This is £39.50/t higher than prices for Nov-20 delivery (Erith) on 21 February 2020.
Global grain markets
Global grain futures
A tight UK wheat balance is expected for this season, according to latest AHDB estimates. The news of E10 bioethanol blend and the reopening of Vivergo could add demand late this year and support domestic prices.
Maize prices continue to be supported by demand, while the South American crop sizes are not clear yet. China is set to increase its maize area this year, which could reduce import demand slightly next season.
Despite a small fall in delivered prices this week, barley feed demand remains strong as an alternative to wheat. Though demand seems to have reached a limit.
Chicago wheat futures (May-21) were up $1.75/t last week, despite falling 2.3% on Friday. Friday was the second day of price declines. Warmer weather reduced crop damage threats in the US, resulting in profit-taking. As the crop emerges from dormancy, the market will be able to assess the level of winter kill.
Last week, the International Grains Council (IGC) increased its global 2020/21 wheat production estimate by 4.9Mt to 772.8Mt. This was mostly on account of increased Australian production, up by 2.2Mt to 33.3Mt. Russia’s crop was also increased, rising 0.8Mt to 85.3Mt.
French wheat and winter barley are in good condition, according to FranceAgriMer. On 22 February, 87% of soft wheat was in ’good’ or ‘very good’ condition compared to 64% last year. The proportion of winter barley rated ’good’ or ‘very good’ totalled 83%, up from 66% last year.
This improves the likelihood of a rebound in French wheat and potentially barley production this year, subject to spring conditions. However, spring barley planting progress was slower year-on-year (from 28% to 20%), due to heavy rain.
Chicago maize futures (May-21) gained $2.26/t this week (Fri-Fri) to $215.55/t. US maize crop insurance prices have now been set for most areas, at $180.31/t. This is up from $152.76/t last year. It could support the forecast increase in the US maize area for harvest 2021 compared to 2020.
Chinese demand can be considered a key driver of maize prices this season. Though, China is set to increase its own maize area this year by 667Kha from 41.3Mha in 2020. There are still reports of Chinese buying for US maize exports in the summer, but these are not yet confirmed. Therefore, how much impact an increase in production in China may have on import demand is yet to be determined.
UK feed wheat futures May-21 closed at £207.00/t on Friday, up £1.50/t on the week. New crop (Nov-21) gained £0.75/t Friday to Friday. Prices rose on Thursday fuelled by the news of E10 fuel launching in September 2021 but backed off slightly on Friday.
Delivered bread and feed wheat prices gained alike last week (Thurs-Thurs). For new crop feed wheat (Nov-21), North Humberside prices gained £3.50/t on the week to £179.00/t. Similarly, East Anglia delivery (Nov-21) gained £3.50/t week-on-week to £172.00/t.
Last week, the AHDB released the latest supply and demand estimates for the UK. These figures forecast a wheat surplus of 73Kt, a change from a deficit in November’s estimates.
Why have we moved to a surplus from a deficit? The forecast for domestic consumption for 2020/21 fell by 814Kt from November’s estimate to 12.62Mt. This is mostly on account of a fall in animal feed consumption. This fall more than offset production being cut to the lowest in nearly 40 years at 9.66Mt.
But the surplus is before exports are accounted for. The UK exported 116.7Kt of wheat from July to December, shifting the surplus to a deficit of 43.7Kt. Therefore, the wheat balance remains tight into next season, especially with the potential of added E10 demand.
The soyabean market and tight old crop rapeseed supplies continue to support prices. The expected lower global carry-over stocks into 2021/22 are also supporting new crop prices.
Global oilseed markets
Slow South American harvests are supporting prices at the moment – despite what seems to be a temporary slowdown in Chinese demand. Global supplies are expected to remain tight compared to demand over the coming months.
Global oilseed futures
UK delivered oilseed prices
Global soyabean and soyameal prices fell on Thursday and Friday as speculative traders booked the profits from the previous week’s rises. The trigger for the profit taking was lower US export sales of soyabeans and bigger Brazilian crop forecasts. However, prices still rose Friday - Friday.
Net US export sales for 2020/21 in the week ending 18 February totalled 168Kt (USDA). This is the lowest volume since the end of December and below market expectations. This is likely to be linked to the public holiday for Chinese Spring Festival (New Year), which ran from 11 to 17 February.
Soyabean harvests in South America, especially Brazil, are still a long way behind previous years’ pace. Until these crops becomes available, the market is reliant on US exports. As US stocks are shrinking, this keeps the market supported.
The Brazilian crop is now forecast at 130.0Mt by AgResearch, 2.0Mt more than previously. This still below the 133.8Mt forecast by Conab (Brazilian government agency), but above last year’s harvest of 124.8Mt.
In Argentina, concerns for soyabean yields are rising, as soil moisture levels decline again. Last week 15% of the crop was rated ‘poor/very poor’ by the Buenos Aries Grain Exchange, up from 11% the previous week. Crops are at pod fill but conditions vary considerably across the country. In some areas, unless rain falls in the next fortnight, yields will reduce.
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.