Monday, 2 December 2019
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
There are some global concerns regarding new-crop wheat supply but the 2019 harvest brought high production for the northern hemisphere. Tight southern hemisphere production could support prices.
US maize markets continue to drift sideways despite slow harvest and heavy snow forecasts over the weekend.
The discount to feed wheat widened to around £19.00/t and will stay discounted for competitiveness. Large 2019 crop and high prospects for 2020 will likely continue to pressure prices.
Global grain markets
Global grain futures
US corn futures (May-20) drifted sideways last week (Friday – Friday) to close at $151.87/t. On the other hand, US wheat futures (May-20) reached the highest value since mid-July, gaining $8.08/t across the week to close Friday 29 at $200.14/t.
There are concerns around the potential for Argentina’s wheat crop, with yields in some regions reportedly down by over a third. The tightened supply to Asia from Australia was expected to be eased by shipments from Argentina but this may now be tighter than anticipated.
There are also new-crop concerns in the northern hemisphere with wet weather in the UK and France hindering wheat drilling which aids worries for next year’s availability. These concerns have supported old-crop futures (May-20) for both UK feed wheat and Paris milling wheat.
It is however important to remember that 2019 harvest brought exceptional production of cereals in the northern hemisphere. Also Black Sea prospects for 2020 remain high with increased planted area and relatively good conditions.
The UK wheat market is still currently dominated by new-crop anxiety with all UK delivered feed wheat prices gaining between £1.50-£3.00/t. There is still optimism that winter wheat can and will be sown into the New Year.
UK feed wheat futures (May-20) closed on Friday 29 at £151.25/t gaining £2.15/t. Nov-20 closed Friday 29 at £157.25/t, gaining £1.60/t.
There has even been gains on delivered feed barley despite last week’s released early bird survey forecasting a 28% area increase for spring barley year-on-year. Furthermore, the UK Balance Sheet estimated that 2,328Kt of surplus barley was available for either export or free stock last Thursday.
Anecdotal reports suggest exports remained strong through October. In contrast there has been slowing business as we’ve moved through November. South Western Europe has been trading with other origins due to longer-term trade uncertainty from the UK. Trade between September and December could possibly end up averaging out.
Paris nearby rapeseed futures saw declines throughout last week before rebounding to close at €389.75/t. Sterling strengthened against the euro which pressured December delivery to Erith down £4.50/t to be at £333.50/t.
Global supply of soyabeans remains high with a US/China trade deal seemingly unlikely in the short-term. Better weather in South America could translate to a larger crop arriving to markets in February.
Global oilseed markets
Global oilseed futures
On Friday, Chicago soyabean futures (nearby) declined to a near 3-month low, with markets pressured from the trade-tension between the US and China; a deal seems unlikely in the near future. Positivity from US export sales of soyabeans was unable to support markets however. Weekly sales of 1.66Mt were 25% above the prior 4-week average with 831.20Kt booked for China.
Pressure on US markets is also seen with an improvement to South American weather with rainfall benefiting soyabean producers last week. As of 26 November, the Brazilian soyabean crop is 79% planted, whilst this is 10% below last year, it remains close to the historical average.
EU imports of rapeseed from non-EU countries saw their slowest week since the third week of the season (EU Commission). Imports for the season as of 24 November totalled 3.16Mt, an increase of 45.1Kt on the week. Rapeseed imports last season for this point were at 1.7Mt.
UK delivered oilseed prices
Paris futures closed higher on Friday, but mostly unchanged from the previous week in a dull market. In the UK, stronger sterling didn’t help the situation, trading on Friday pm at £1=€1.1734 up from €1.1631 the previous week.
All UK delivered price quotes reduced by £4.50/t for Dec-19. The market is waiting for imports to reduce, which could help support demand for domestic supplies.
Reports suggest imports still continue to supply the main crushing plants with Ukrainian seed featuring heavily. Imports of rapeseed oil are also being used to improve overall quality of domestic oil.