Monday, 16 September 2019
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
Global wheat prices saw some support from the latest USDA WASDE report. Managed money positions remained in a net short position although at a lower level from the week before.
Paris maize futures stalled on the week despite market drivers from tighter Black Sea production figures. Reductions to the US maize crop forecasts enabled Chicago maize futures to rise.
Barley outlook remains well supplied both domestically and in the EU. With UK uncertainty surrounding Brexit tariffs, prices will need to remain competitive in export markets.
Global grain markets
Global grain futures
Australian wheat production figures were cut 2Mt to a 19.1Mt crop as drought conditions persist. Paris wheat futures (Dec-19) increased by €3.50/t but were capped by the latest USDA supply and demand estimates (WASDE) which detailed a 1.0Mt increase to the EU wheat crop.
The latest US maize crop conditions showed a 3% decline in the proportion of the crop rated as “good” or “excellent” now at 55%. Soil moistures across the corn belt are close to surplus with some rain forecast in the upcoming weeks. The report indicated corn crops are 1-2 weeks behind in many places.
Brazilian maize plantings are underway with some dryness concerns continuing for central and southern producing areas. Weather conditions in the southern hemisphere will be of importance as sowings continue.
Ukrainian maize production figures were cut 1.4% in the latest WASDE report with a lack of substantial rainfall creating dryness concerns.
UK wheat futures (Nov-19) saw little movement over the week gaining £0.25/t to close at £134.40/t. Sterling drew back in the week before recovering on Friday, ending 1% higher on the week against the euro.
The latest harvest report is now available. The winter wheat harvest was 97% complete as at week ending 27, with pockets of feed wheat outstanding towards the north of the UK. Current GB yield estimates are at 8.8-9.0t/ha, an increase on the 5 year average of 8.3t/ha.
Global rapeseed supply is tightened in the latest WASDE report on the back of low EU production. Australian supply is also in question due to dryness pressuring crops.
US-China tension seems to be easing offering some support to soyabean prices but trade talks have not yet commenced and so a deal is yet to be made.
Global oilseed markets
Global oilseed futures
US soyabeans (Dec-19) gained $15.06/t across the week. China announced that soyabeans will be exempt from additional tariffs, ahead of trade talks recommencing with the US.
Additional tariffs on US soyabeans had meant an increase from 3% to 33%. It is unclear whether the additional 30% will be dropped in full but it does imply that trade talks may commence on better terms than initially thought.
There are also reports that China purchased 600,000t of US soyabeans, of which 204,000t is confirmed.
Crude oil prices have spiked this morning on the back of an attack on Saudi Arabia’s largest oil processing facility on Saturday halting over 50% of the country’s output. Saudi Arabia is the world’s biggest oil exporter, so an interruption of this scale could impact global oil supplies driving prices higher.
UK delivered oilseed prices
Paris rapeseed futures (Nov-19) have gained €0.75/t across the week to close Friday at €383.50/t.
The latest USDA WASDE lowered the global oilseeds outlook from the previous report. The global rapeseed outlook is for the lowest production in 3 years primarily due to reduced supplies from the EU.
Australian canola production was also forecast down from last month’s report on the back of dryness. The extreme dryness in Australia, pressuring crop production is not forecast to break anytime soon. As Australia is a key origin for EU rapeseed imports, this could offer support to oilseed rape prices.