Monday, 30 December 2019
This week's view of grain and oilseed markets, including a summary of both UK and global activity.
US wheat markets continue to find support from a US-China trade deal as hopes rise for increased purchases from China. This has supported most other wheat markets too.
Maize markets have seen some support globally. The new Argentinian government has raised export tax on maize. In addition, conditions remain relatively dry in South America.
An increased area of domestic barley for harvest 2020 will add further pressure to an already well-supplied market.
Global grain markets
Global grain futures
US wheat futures (May-20) gained $4.59/t from Friday to Friday on the back of support from the phase-one trade deal between the US and China. This also provided support to Paris wheat markets, with May-20 Paris milling wheat futures gaining €2.00/t across the week to close Friday 27 at €189.00/t.
Maize markets have also seen some gains. Following the increase of the export tax from the Argentinian government on certain commodities including maize, export volumes have declined. This may have contributed to the support. South America is also experiencing dryness, causing concerns. The Buenos Aries Grain Exchange currently rates early corn at 32.3% in good-excellent condition, compared to 54.4% the previous year.
UK wheat futures (May-20) lost £0.50/t across the week, to close Friday at £151.00/t. This was due to a drop on Friday, mostly driven by lack of trade. This UK contract (May-20), in euro terms, was following the trend of Paris futures closely until Friday where it dropped rather than gained, on the back of currency movements.
Having strengthened throughout December in the run up to the elections, sterling has since dropped off, until last week. Since Friday 13 December to Monday 23, sterling has lost nearly 3% against both the euro and the US dollar. Since then (to Fridays close) sterling re-gained 1.11% against the dollar and 0.31% against the euro.
NB. Delivered prices are as at Thursday 19 December 2019. Delivered prices will be collected and published again on 10 January 2020.
Global oilseed market gains have filtered through to rapeseed markets. A reduced EU rapeseed import figure could further create demand in the New Year. The presence of soyabean imports in the EU may cap large gains in rapeseed markets.
Soyabean markets continue to be supported by the US/China trade deal, but now await actual Chinese purchases for further gains.
Global oilseed markets
Global oilseed futures
Chicago soyabean nearby futures have remained on an upward rise over the festive period despite some daily declines. Since 20 December, prices have risen $6.89/t to $347.96/t at 10am this morning. The belief that China will begin to purchase large volumes of US soyabeans once again in the near future following the agreement of a ‘phase-one’ deal is a primary driver.
Palm oil futures have too seen gains over the festive period. Continued expectations of a reduced production period next year have been met by an increase in demand; following a push for biofuel usage within the top two producing countries. Exports of Malaysian palm oil products for Dec 1 – 25 declined 8.5% - 12.8% from the same period last month.
UK delivered oilseed prices
Rapeseed markets have seen support from gains in global oilseed markets. Paris rapeseed futures (nearby) rose €4.50/t from 20 Dec to 27 Dec, to be at €412.75/t. EU rapeseed import data for the week ending 22 December highlighted a consecutive weekly increase below 100Kt as the presence of Ukrainian rapeseed withdraws from markets.
Concerns for Ukrainian winter crops, including rapeseed, have been noted, as winter temperatures linger near freezing. A drier autumn meant many crops were planted later than expected. As such, frost resistances for the later planted crops will be lessened. This could become an important watch point moving forward.
NB. Delivered prices are as at Friday 20 December 2019. Delivered prices will be collected and published again on 10 January 2020.