Monday, 1 July 2019
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
Global supplies for 2019/20 look favourable with increased Canadian area and conditions good in the US. The European heatwave remains an important watch point with crops in yield determining stages.
The USDA acreage report pegged US corn area at 37.1Mha, 2Mha above trade expectations. However, many planting decisions were made after the surveys cut-off date. Elsewhere, global supplies look favourable.
Ex-farm feed barley prices have been slowly rising for 5 weeks as supply tightens and feed wheat remains relatively firm. Malting barley remains under pressure from Brexit uncertainty.
Global grain markets
Global grain futures
Chicago grain futures continued to fall week-on-week (21 June to 28 June). Maize dropped $8.66/t, on the back of the USDA acreage report released on Friday. The corn area was reported at 37.1Mha, 2Mha above trade expectations in a Reuter’s pre-report poll. This is likely to drop further in a revised report on 12 August (read more here).
Wheat markets remained stable last week, but European markets have followed maize lower today. With many wheat crops at grain filling, the European heatwave remains a watch point for yield and crop conditions.
The wheat market continues to look well supplied. Drier weather in the US allowed wheat harvest to progress and quality remains good. Similarly, harvests in Russia and Ukraine are underway, easing some dryness concerns for winter crops. Elsewhere, Canadian wheat (excluding Durum) and corn areas are forecast up year-on-year (Statistics Canada, 26 June) with recent rainfall alleviating dryness concerns.
UK physical price movements for old-crop varied last week, while new-crop prices generally improved. Milling wheat for July delivery into Northampton, continued to firm. Prices for old-crop feed wheat delivered to East Anglia and Yorkshire fell, with demand slowing as we near harvest. New-crop delivered feed wheat and barley prices generally firmed.
Warm, dry weather experienced for most of last week and forecast for this week should assist with crop development. Dry weather should also allow for timely spray applications minimising disease concerns arising from previously wet and warm weather.
The global outlook for rapeseed has tightened slightly. EU supply and demand still looks tight, and Canada canola plantings are down year-on-year. That said, global rapeseed stocks remain large.
The latest USDA acreage report forecast soyabean planted area at 32.4Mha, 1.8Mha below trade expectations. Despite cut to US acreage, supply in South America and global stocks are large.
Global oilseed markets
Global oilseed futures
Friday’s USDA acreage report estimated the area of soyabeans planted for harvest in 2019 at 32.4Mha. Leading a short-term bullish sentiment for soyabeans. The latest estimate is a cut of 1.9Mha on the previous estimate (March), and is 1.8Mha below trade expectations. With soyabeans still being planted when the survey was carried out we could still see the area change further. Soyabeans were also supported by the sale of 2018/19 US soyabeans to China.
While the production outlook for US soyabeans may look tighter for 2019/20, old crop carryout stocks continue to look large. The USDA grain stocks report (also released on Friday), estimate soyabean stocks held in all positions on 1 June at 48.7Mt, up 47% year-on-year.
Elsewhere Southern Hemisphere soyabean crops are still expected to be large. Ongoing trade disputes and the continued threat of African swine fever could limit market gains for soyabeans.
UK delivered oilseed prices
New-crop physical rapeseed prices were marginally down last week, tracking Paris rapeseed futures lower.
EU rapeseed production is forecast to reach less than 18Mt this season according to Stratégie Grains, following poor establishment conditions and continued pest challenges. Furthermore, Canadian canola plantings were less than intended at a 3 year low of 8.5Mha, down 2% on the previous estimate (April) (Oilworld.biz).
The reduced area of canola in Canada, is likely a reaction to the ongoing trade dispute with China. The dispute has resulted in increased stocks, which combined with forecast production increases for Ukraine and Australia have pressured prices.