Market Report - 19 October 2020

Monday, 19 October 2020

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





Despite growth in world stocks of wheat, concerns over Black Sea, US and South American weather are supporting values. This has combined with maize bullishness to firm prices.

As with wheat, concerns over South American dryness are supporting values. While Chinese buying continues it is hard to see corn prices breaking current rally.

Barley remains cheap in attempt to buy some demand. With abundant supplies both globally and domestically, barley needs to maintain a strong discount to other grains.

Global grain markets

Global grain futures

Grain markets continued to see support last week, both Chicago wheat (Dec-20) and maize (Dec-20) broke through key technical resistance points at $6.00/bu for wheat and $4.00/bu for maize. Maize futures now stand at their highest point (nearby) since September 2019, meanwhile nearby wheat futures reached the highest point since December 2014!

Chinese buying continues to support global grain markets. Chinese importers purchased another 420kt of US maize on 14 October, with imports surging ahead of USDA import forecasts. Concerns are also mounting for US maize conditions following hurricane Delta.

The new crop market is equally supported, concerns over dryness in key grain producing regions is outweighing what are otherwise bearish fundamentals. The Black Sea region, in particular Russia and Ukraine, remain exceedingly dry during winter plantings, with recent rains in the former not enough to abate concerns.

South America is similarly dry as we move towards the winter wheat harvest, and key planting windows for maize. Last week, the ongoing dryness in Argentina led the Rosario Grain Exchange to further reduce its estimate of 2020/21 wheat production from 18Mt to 17Mt.

Finally, in the US dry weather continues to be a potential hazard for winter wheat planting. Dryness is currently centred in the west of the country, where little wheat is produced, however with below average rainfall forecast across Texas, Oklahoma and Kansas this could become an increasing concern.

UK focus

Delivered cereals

UK feed wheat futures (May-21) closed last week at £187.95/t, a rise of £2.45/t Friday-Friday. Support has continued so far on Monday, with the contract reaching £190.10/t at 1pm. The Nov-20 contract was up just £0.40/t Friday-Friday, at $185.40/t, open interest on the contract has continued to decline in recent weeks as we move towards the first notice day on the contract (26 October).

UK physical markets were mixed last week, with a slight firming of feed wheat in East Anglia, where the premium of November delivery over Nov-20 feed wheat opened back out to £4.00/t. Milling wheat premiums also extended in the week to Friday, milling wheat delivered North West (November delivery) was quoted at a £36.50/t premium over futures, up £2.00/t on the week before. This is likely a reflection of the increased cost of importing milling wheat, Paris milling wheat futures (Dec-20) ended the week €8.75/t (£8.17/t) up, at €209.00/t.

On 8 October the UK signed a free trade detail with Ukraine, while full details are yet to be published the government press release states "It [the trade deal] delivers the same level of liberalisation in trade, services and public procurement that businesses currently enjoy under the existing EU-Ukraine Association Agreement". This has the potential to be significant for UK grain imports.


Oilseed Rape


Rapeseed prices dipped last week, likely due to the impact of falling soyabean demand. Although, long-term outlook is optimistic due to low EU stocks and Black Sea planting concerns.

Soyabean prices fell last week as managed money removed net longs and options in CBOT futures. Yet, strong Chinese soyabean meal demand and 2020/21 production concerns create a bullish outlook.

Global oilseed markets

Global oilseed futures

Global oilseed prices eased last week, with falling demand suppressing price highs and resulting in short-term falls. The fall was led by soyabean prices, Chicago soyabean futures (Nov-20) fell by $5.69/t to close on Friday at $385.81/t. Investment funds reduced their net long position in Chicago futures last week from 238,394 to 226,444 contracts (Refinitiv).

Despite being the first net selling week since August for soyabeans, the long-term outlook is still considered optimistic. Recovery of the Chinese third-quarter pig herd has become apparent this week, with pork production predicted to have risen by 18% to 8.4Mt, from last year. This month, around 24M pigs are expected to be slaughtered - an 8% rise from September but still falling short of the 45M typical monthly requirement.

On the back of dryness concerns through the onset of La Niña, there are increasing concerns surrounding the Brazilian 2021 soybean crop, rainfall in the key producing region of Mato Grosso was down 77% in September. Despite this, the 2020/21 Brazilian soyabean crop was estimated by Conab last Thursday at 133.7Mt, up 7% year-on-year.  The prospect for support in soyabean prices is elevated by the large proportion of forward selling reported to have taken place.

Brazil have announced this week the suspension of tariffs on soy imports from countries outside the Mercosur trade bloc until 15 January 2021, in the hope to curb inflation and support poultry and pork producers.

Finally, contributing further to a bullish long-term oilseeds outlook, world production of sunflower seed and oil is to register unprecedented declines in 2020/21, driven by issues in the Black Sea. Global production is expected to fall by 4.8Mt to a 3-year low of 51Mt. World production of sun oil is predicted to decline also, falling by 2.4Mt to 19.2Mt October-September 2020/21 (

Rapeseed focus

UK delivered oilseed prices

Rapeseed prices eased last week on the back of net soyabean sales and the consequent reaction in the vegetable oil market. Rapeseed for November delivered into Liverpool was quoted as £359.50/t on Friday, a fall of £3.50/t from the previous week

Yet, the rapeseed long-term outlook remains positive. Supported by high vegetable oil demand and low EU stocks, sustained high prices are expected to continue for UK producers. Last week, winter crop planting progress showed that Ukrainian rapeseed plantings were around 71% complete on the 5 October. Dry conditions have meant conditions for planting have been difficult across the Black Sea, with another 286Kha of their projected area still to plant.

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