Market Report - 2 March 2020

Monday, 2 March 2020

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





Global supplies remain substantial with hampered trade in the short-medium term. Longer term, the IGC have raised the 2020/21 global wheat production estimate to record levels.  

Maize continues to see pressure from coronavirus and lack of demand from China. South American crops also look good with 98% in fair-excellent condition and harvest underway.

Global supply remains decent with increased area’s predicted for 2020/21 continuing to weigh on markets. Large wheat supplies will also pressure barley prices.

Global grain markets

Global grain futures

US old (May-20) and new-crop (Dec-20) grains markets continued to fall last week. US wheat (May-20) lost nearly $10.00/t Friday-to-Friday to close the week at $192.88/t. US maize (May-20) also dropped, to close the week at $144.98/t, down $4.92/t week-on-week.

As further news of the spread of coronavirus outside of China became apparent there were concerns of a global pandemic. This has continued to add pressure to economic situations and subsequently global markets.

The lack of trade is also met by increased production estimates. Last week, the International Grains Council (IGC) increased its predictions of world grain production for 2019/20 to 2.172Bt, raising both wheat and maize production compared to the January estimate. This puts global grain production 30Mt higher than in 2018/19.

The IGC report also pegs global wheat production for 2020/21 at record levels of 769Mt. This is driven by a 2% year-on-year rise in estimated harvested area for 2020/21.

UK focus

Delivered cereals

Despite the UK 2020/21 wheat area reduced, both old and new-crop (May-20 and Nov-20) futures contracts have been dragged lower by global markets. The May-20 contract closed Friday at £149.05/t, £3.70/t lower week-on-week. The Nov-20 contract dropped £1.95/t, to close Friday at £159.30/t.

Sterling lost nearly 3% against the euro from 21 February to Friday’s close and continued falling this morning. On Friday £1=€1.1626, the lowest since November 2019. This helped to soften the drop in physical prices slightly. Delivered feed wheat into East Anglia (nearby) lost £2.50/t last week at £153.00/t.

Weak sterling makes imports expensive which could help to support UK prices at import parity, however Paris milling wheat (May-20) dropped €8.50/t across the week too.


Oilseed Rape


Coronavirus sentiment continues to weigh on soyabeans, though markets hope for better Chinese demand. A slower Brazilian harvest pace and increased Argentinian export taxes on soyabeans offered some support.

European rapeseed markets saw large declines last week as news of coronavirus reaching Europe worries markets. Reductions to European rapeseed production estimates highlight an increasingly tight supply situation for the 2020/21 season.

Global oilseed markets

Global oilseed futures

The impact of coronavirus was laid bare last week as heavy losses across global economic markets were seen amidst fears of a pandemic outbreak. In the opening half of last week, soyabean futures (May-20) fell to their lowest point since May last year. The contract gained $3.77/t from Monday-Friday, as infection figures indicated the outbreak slowing in China, buoying hopes for future soyabean trade.

Support for US soyabeans was also seen from the suspension of Argentinian export registrations last week. With oilseed markets awaiting significant Chinese purchases of US soyabeans, fewer alternative origins available for China are viewed as a benefit to potential US sales.

Malaysia’s new prime minister has announced his intentions to repair relations with India, as a significant fallout badly affected palm oil trade between the two countries. Malaysia’s monthly palm exports to India fell 85% in January to their lowest point since 2011. The Malaysian palm oil futures contract (nearby) is currently at its lowest point since late October. Its decline has acted as an anchor on oilseed markets throughout February.

Rapeseed focus

UK delivered oilseed prices

News of the coronavirus outbreak last week reaching Europe left rapeseed markets tumbling. Paris futures (May-20) fell €19.75/t from Friday-to-Friday to close at €380.25/t. Domestically, delivered rapeseed (Erith, Mar-20) fell £7.50/t to £329.50/t. The drop in the value of sterling against the euro prevented the UK from feeling the larger decline.

Forecasts to European rapeseed production for the 2020/21 season were revised down 190Kt to 17.85Mt in the latest Stratégie Grains monthly report. The reductions were reflective of a cut to estimated EU rapeseed area. With this, it remains likely the EU will see a hefty import rapeseed requirement for the second year running.

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