Market Report - 27 July 2020

Monday, 27 July 2020

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





Delays in harvests will impact in the short term, and reductions in estimates across Russia and the EU are likely to support prices. A global surplus is still expected in 2020/21, albeit smaller than previously forecast.

Large global stocks are still anticipated, though there is some uncertainty due to the impact of US weather on crop development. Drought concerns developing in Argentina, which have the potential to tighten supply there later in the year.

EU production forecasts remain high for barley and demand continues to be unclear. The outlook for other crops is likely to influence the wider market direction of barley.

Global grain markets

Global grain futures

Global markets were generally supported last week by short term delays to harvest and reductions in the forecast of the global wheat surplus.

Delays in the Ukrainian wheat harvest have led to higher export prices over the last week. Ukraine’s wheat harvest is currently 5Mt behind the same time last year, with only 13Mt currently harvested compared to 18Mt this time last year, according to Reuters. Export volumes have also been lower, despite demand from importing countries, which has also helped support prices.

As harvesting continues in Europe, the French soft wheat harvest is expected to be considerably down on last year. This is due to a combination of a smaller planted area due to extreme weather conditions earlier in the year and yields also being significantly down. Consultants Agritel have forecast a 14% reduction in yields, now down to 6.83t/ha.

Russian wheat export prices have continued to rise week-on-week. Tight supply of new-crop has led to this price rise as traders look to fill demand for vessels. The Russian FOB price currently sits around $210.00/t for 12.5% protein wheat according to IKAR.

Weather conditions in some Russian regions including Western Siberia and Volga remain dry, according to SovEcon. This poses a risk to spring wheat yields and may exacerbate the year on year reduction in supply. In contrast, Southern and Central Russia have now received some rainfall, supporting crop potential.

UK focus

Delivered cereals

UK wheat futures (Nov-20) increased over the course of last week after an initial drop on Monday, closing at £168.75/t on Friday, following the global trend. Weakening sterling continues to support UK prices, with £1= €1.097 as at 10.30am this morning.

Remaining old crop delivered prices remain relatively stable (Thu-Thu) though there were declines for new crop prices. Feed wheat for July delivery to Avonmouth, was reported at £172.50/t, up £1.00/t on the week, however prices were down slightly for harvest and September delivery. New crop feed barley prices had a minimal drop week-on-week.

UK prices generally continue to follow the global trend, but need to remain high in order to attract imports to make up for the smaller domestic crop.


Oilseed Rape


Smaller crops expected in Europe and Ukraine, contrast with expectations for large crops in Canada and Australia. In addition, uncertainty over the pace of economic recovery means uncertainty over demand for veg oils and so rapeseed.

Despite strong demand from China, the outlook for soyabeans in the coming months is limited by the good prospects for the 2020 US crop, plus uncertainty due to the coronavirus pandemic and trade tensions between the US and China.

Global oilseed markets

Global oilseed futures

Chicago soyabean futures firmed last week as more US soyabeans were sold for export to China and the Nov-20 contract closed above the key psychological level of $9/bushel on Friday. However, gains were limited by continuing tensions between the two countries and it’s uncertain if the market can sustain this price level. China is also buying large volumes from Brazil as the country’s pig herd recovers from the African Swine Fever outbreak.

Total US exports and outstanding sales for the 2019/20 season, which runs until the end of August, are now 1.8Mt above the USDA’s forecast for the season. Furthermore, the amount of US soyabeans sold for shipment in 2020/21 at this stage (seven weeks before the season starts) is the highest for six years.

There was also support for palm oil prices as concerns persist about the impact of heavy rain on harvesting, which occurs year round, and so production. It’s important to monitor palm oil markets in the weeks ahead as veg oils are once again having a stronger influence on rapeseed prices.

Rapeseed focus

UK delivered oilseed prices

Support in the wider oilseeds and veg oil markets did not filter through to European rapeseed prices last week, because the euro firmed against the US dollar.

Ukrainian rapeseed yields were down 11% from 2019 as at 16 July, with just over 40% of the area harvested according to UkrAgroConsult. The size of the crop, along with those in Canada and Australia, will be important for European prices in the second half of the season. These countries provide most imports to the European market after the domestic crop is used in the first half the season. The strength of global economic recovery from the coronavirus pandemic will also impact the amount of veg oils required and so the amount of imports Europe needs.

UK delivered prices dipped last week following the European trend (Friday-Friday). There was also a slight shift in the reported basis for Erith, though prices remain indicative following an industrial accident at the crushing plant earlier this month.

AHDB’s first harvest progress report of 2020 will be released this Friday – look out for highlights in Grain Market Daily.