Market Report - 18 November 2019

Monday, 18 November 2019

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

Grains

Wheat

Maize

Barley

Global wheat markets have been drifting lower. Good global supply prospects for 2020/21 could further pressure prices. Domestically, slow farmer selling and poor new crop prospects are supporting prices.

US maize markets are drifting despite harvest delays as these are counterbalanced by slow exports. Record Ukrainian exports in October, expected to continue at pace, will likely pressure global markets.  

Good global supply and poor planting conditions in the UK; potentially pushing farmers to switch to spring barley, would further pressure an over-supplied barley market.

Global grain markets

Global grain futures

US wheat and maize futures (May-20) both lost over the week. Despite a spike on Tuesday, US wheat futures (May-20) closed Friday at $187.67/t, down $3.31/t on the week.

Weekly export sales of US wheat, at 238.6Kt, sat in the low end of the 200Kt-500Kt forecast from analysts, according to Reuters. The US continues to face stiff competition for wheat exports from Black Sea and EU supplies. The recent GASC (Egypt’s state grain buyers) wheat tender for 345Kt was won entirely by Russia and Ukraine.

Stratégie Grains downgraded prospects for EU wheat production for the 2020/21 marketing year in its November estimates. Severe wet weather in the UK and to a lesser extent France led Stratégie Grains to peg EU wheat plantings at 23.7Mha, a reduction of 200Kt from their October estimate.

US maize futures (May-20) followed a similar trend to wheat, losing $2.76/t to Friday’s close, at $152.16/t.

UK focus

Delivered cereals

Although old-crop UK feed wheat futures (May-20) gained just £0.75/t on the week, to close Friday at £152.00/t physical prices rose more. In Friday’s delivered survey, feed wheat for May-20 delivery gained £1.50-£2.50/t, depending on destination. Old-crop support is coming from delayed new-crop plantings.

Nov-20 UK feed wheat futures have risen £18.25/t since the beginning of September, despite a slight week-on-week drop. Continued rain has delayed planting and hampered prospects of the crops currently planted.

The rise in old-crop futures has narrowed the carry from May-20 to Nov-20 to £6.75/t on Friday compared to £7.75/t the previous Friday.

Current perception is that farmers may switch some of their winter cropping into spring barley. Considering the UK barley supply from 2019 harvest is significant, such a switch would further pressure UK barley prices. The need to remain export competitive in barley markets continues.


Oilseeds

Oilseed Rape

Soyabeans

Declines to European rapeseed futures and a rise in sterling value against the euro meant domestic prices fell last week. Canadian canola harvests continue to be impacted by heavy snowfall.

Chicago soyabean markets declined over the week, pressured by a lack of progress in trade negotiations between China and US. Increases to Brazilian soyabean production estimates also weigh on markets.

Global oilseed markets

Global oilseed futures

Chicago soyabean futures (Jan-20) fell $4.68/t over the week, pressuring European rapeseed futures. A lack of a signing date for the ‘phase-one’ deal between the US and China to resolve the trade dispute has pressured soyabean futures. The global supply picture for soyabeans remains plentiful as US soyabean harvests approach completion. The latest crop progress report is due later today.

Soyabean oil futures (Jan-20) lost $24.47/t from Friday-Friday. Price pressure is also seen from large supplies of soyabeans in the US. Crude oil futures (IPE Brent, nearby) increased 1.3% week on week, to $63.30/barrel last Friday.

Brazilian soyabean production is now estimated at 120.86Mt, according to Conab, up 0.47Mt from its initial estimate. This figure is above last year but remains in the average range as dry weather hindered a start to plantings.

Rapeseed focus

UK delivered oilseed prices

UK delivered rapeseed prices (Erith, Nov) declined £2.00/t, reported at £334.50/t last week.

EU imports of rapeseed persist at record pace reaching 2.97Mt as of week ending 10 November. Weekly import volumes picked up as Ukrainian ports exported a greater volume of rapeseed against corn in the first week of November.

Snowfall has further impacted the Canadian harvest of canola, with reportedly 13% still unharvested according to Reuters.

Germany and France has experienced very dry conditions at rapeseed planting. The latest Strategie Grains report predicts a slight recovery in rapeseed production from 16.9Mt last year but remains low at 19Mt.



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