Market Report - 06 January 2020

Monday, 6 January 2020

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

Grains

Wheat

Maize

Barley

Although global wheat supply remains supported, adverse crop condition reports from the US and Black Sea have lifted markets.

While geo-political tensions have played on maize markets this week, a bullish sentiment could return when the focus returns to the US-China trade deal.

Barley markets will remain pressured with sizeable supplies both globally and domestically. Adverse winter drilling conditions in the UK have increased the intended spring barley area, which could result in a large surplus next year.

Global grain markets

Global grain futures

Nearby US wheat futures closed on Friday at $203.72/t, down $0.65/t on the week. On Thursday this contract closed at its highest since August 2018, supported by both the US-China trade deal and declining US wheat crop conditions over the last few weeks. However, prices dropped back on Friday with technical selling and profit-taking hitting the market due to uncertainty between the US and the Middle East.

Paris wheat futures (May-20) closed on Friday at €188.75/t, down €0.25/t on the week before. The week’s trading began at a six-month high, with potential supply issues due to adverse weather conditions in Russia, Ukraine and Australia. However, the declining pressure of the US market subdued prices towards the end of the week.

US maize futures (Mar-20) closed on Friday at $152.17/t, down $1.37/t on the week. While the contract had closed on Thursday at its highest level since November, geo-political tensions weighed on prices at the end of the week.

UK focus

Delivered cereals

UK wheat futures (May-20) gained £1.75/t across the week, closing Friday at £152.75/t. There was also gains for the Nov-20 new-crop contract; gaining £0.45/t across the week, closing at £162.50/t.

There has been a widening spread from old and new-crop futures due to winter drilling issues. However, the spread reduced last week to £9.75/t, down from £11.05/t the week before. Furthermore, support towards the US wheat futures has filtered into UK markets enabling a price gain. Lack of selling interest due to the Christmas break may have also supported markets.

NB. Delivered prices will be collected and published again on 10 January 2020. 


Oilseeds

Oilseed Rape

Soyabeans

Demand in the UK remains high which helps support prices, but with little movement in the soyabean market, price rises could be capped.

US soyabeans have recently experienced bullish sentiment following the development of a US-China trade deal. However, if increased Chinese purchasing of US soyabeans does occur it will likely come at the expense of South America.

Global oilseed markets

Global oilseed futures

The bullish sentiment from the ‘phase-one’ trade agreement between the US and China is starting to ease. However, US markets could see some support this week, as Chinese purchasing of US soyabeans should recommence. This will likely be at the expense of South America. If China slows its purchasing from South America the base price of soyabeans could drop, incentivising other importing countries to utilise South American beans and shifting global trade patterns. 

Also, following the significant losses to the Chinese hog industry, there are some questions surrounding the demand requirements of China. This may mean trade might not return to ‘old’ levels.

Despite rises within the week, Friday-to-Friday US soyabean futures (Mar-20) remained the same at $345.91/t. Oils remain relatively high compared with seed or meal. Nearby US soya oil futures closed the week at levels last seen in Nov-17. Malaysian palm oil futures (nearby) closed at levels last seen in Feb-17.

Rapeseed focus

UK delivered oilseed prices

Despite no change in the week-on-week price of soyabean futures (Mar-20), Paris rapeseed futures have seen some gains. The Feb-20 futures contract rose €2.50/t across the week, to close Friday at €415.25/t. This represents the 6th consecutive week of gains on this contract.

The majority of Europe has experienced adverse weather throughout autumn raising concerns about the area of oilseed rape that will be viable to continue through to harvest 2020. The initial area was already anticipated lower and the supply picture is likely to have been further tightened going forward. Concerns are also present for Ukrainian crops with frost risks heightening.

NB. Delivered prices will be collected and published again on 10 January 2020. 



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