Market Report - 01 September 2020

Tuesday, 1 September 2020

This week's view of grain and oilseed markets, including a summary of both UK and global activity.





UK wheat prices remain firm with strong premiums reported to futures, though imports may cap the gains. Large global stocks are still anticipated, although adverse weather in some of the major exporting nations may limit further growth.

Reduced production figures for both the EU and US are now expected, however the impact of this on the large global maize-crop is likely to be minimal.

Supply of barley in the domestic market is still hampering prices. Barley remains at a notable discount to wheat as it aims to remain competitive in export markets.

Global grain markets

Global grain futures

Chicago maize futures (Dec-20) were up to $140.85/t on 31 August, up $5.02/t on the same day of the previous week. The US has had their maize prospects reduced from previous estimates, with US storm damage earlier in August impacting on production.

Maize production forecasts within the EU are also expected to be slightly down due to reduced yields. The total expected maize crop is now at 64.4Mt (Coceral), marginally below last year’s levels. Ukraine’s maize harvest forecast has also been cut back by 8% to 35.1Mt according to Agricultural consultancy APK-Inform.

Despite these reductions, the global maize crop is still anticipated to be significantly up on last year. The latest global grains forecast from the IGC gives an overall bearish outlook for prices, due to increases in supply of global grains. The IGC forecasts estimate total grain production may grow by a further 5Mt, to reach 2,230Mt.

Global wheat prices have been showing signs of growth. Paris wheat futures (Dec-20) were at €185.50/t on 31 August, up slightly on the week.

One of the future drivers for global wheat prices will be Canada who are anticipating a wheat harvest of 35.7Mt, which would be their largest wheat crop for seven years. In contrast to this, there is currently some uncertainty around harvests in the southern hemisphere, with Argentina continuing to face issues due to drought and the risk of a La Niña weather event.

UK focus

Delivered cereals

UK wheat futures prices continue to follow the global trends. The UK wheat crop is still expected to be around 10Mt (Coceral), with below average yields of 7.3-7.7t/ha being reported.  UK feed wheat futures (Nov-20) closed at £169.00/t on 28 August after trading earlier in the day at £169.50. This was the highest prices have been since 17 June.

UK bread wheat prices continue to operate at import parity; the prices generally in line with the cost of imported milling wheat entering the UK from abroad. However, buyers are paying firmer premiums for feed wheat due to lack of farmer selling, with prices strengthening in comparison to futures.

Feed barley is at significant discount to feed wheat, needing to remain competitive for export markets. Sterling did make some gains against the euro towards the end of August, although remains historically low, at around £1:€1.12, helping to make UK barley exports more competitive.


Oilseed Rape


Global rapeseed supplies continue to look comfortable, including the large crop expected in Canada, therefore capping price gains.

Crop worries are currently supporting prices, despite the forecasts showing a small global surplus of soyabeans in 2020/21. The longer-term outlook depends on South American weather and what the US harvest reveals.

Global oilseed markets

Global oilseed futures

Soyabean and soy oil prices soared last week due to worries about the impact of dry weather in the US on yields, as well as continuing export demand for US soyabeans.

By 20 August, 22.4Mt of US soyabeans had been sold for shipment in the 2020/21 season, which starts today. This is the second largest amount ever sold before the season’s start, with two weeks’ worth of data still to be released. China has been buying more US soyabeans due to the phase 1 trade deal and the continued recovery of its pig herd.

Market participants also expect that the USDA will report a larger amount of soyabeans were crushed in July tonight. If this isn’t confirmed, it could bring more short term pressure on prices, especially because speculative traders have bought more heavily into Chicago soyabean futures over recent weeks.

The global 2020/21 soyabean crop is estimated at 373Mt by the IGC, 8Mt higher than in July and 34Mt above 2019/20. This increase is partly offset by higher demand, but still gives an expected surplus of 5Mt.

However, planting of soyabean crops for 2020/21 is soon to start in South America. While conditions look generally favourable in Brazil, less rain has fallen than normal in Argentina. Already this dryness has affected sunflower plantings in Argentina, with the Buenos Aries Grain Exchange reporting 200Kha remains unplanted due dry soils. Soyabean plantings may meet similar challenges if the dryness persists.

Rapeseed focus

UK delivered oilseed prices

Paris rapeseed Nov-20 futures gained €2.50/t last week (Fri-Fri) following the gains in global soyabean prices. However, UK delivered rapeseed prices (Nov-20, Liverpool) were only up £1.00/t between Friday 21 and Friday 28 August, because sterling strengthened against the euro (0.3%) and US dollar (1.6%).

Paris rapeseed futures Nov-20 were up a further €0.75/t yesterday, to €383.00/t.

Canada’s 2020 canola (rapeseed) crop was yesterday estimated at 19.4Mt by Statistics Canada. This is slightly below last year’s 19.5Mt, but still historically large. Statistics Canada used satellite technology to estimate yields this year rather than surveying farmers, due to the coronavirus pandemic. This means more uncertainty than normal, but is unlikely to support global rapeseed prices at this stage.