this is div id="printarea" hardcoded in Layout.cshtml

In publishing and graphic design, Lorem ipsum is a placeholder text commonly used to demonstrate the visual form of a document or a typeface without relying on meaningful conten

below tandart print area (defined by @media print in AHDBprojectblue.less)

Market Report - 30 March 2020

Monday, 30 March 2020

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

Grains

Wheat

Maize

Barley

Global prices continue to be supported by increased levels of demand, though moves in currency markets limited some gains. Wheat markets see sentiment driven support from a proposed Russian grain export limit and an anticipated small US spring wheat area.

Increases to the EU maize production figures have raised total EU grain production estimates. Dry weather has affected the early crop development of the second-maize crop (safrinha) in southern Brazil.

Better UK weather last week enabled many farmers to push on with spring drilling acreages. UK barley prices have recorded some support from increases in wheat markets, but still remain at a wide discount.

Global grain markets

Global grain futures

Last week saw increases to US and Black Sea wheat prices. This helped to provide wider support to global grain markets.

In the US, elevated levels of panic buying in supermarkets has pushed up demand for wheat in the short-term, enabling prices to increase. As the outbreak of coronavirus in the US starts to spread further across the country, this level of demand could likely persist. From a longer-term view, markets await the release tomorrow of US planting intentions for the upcoming season. The figures will give an estimate to the US spring wheat area and an updated look at the US winter wheat area. Industry estimates point towards the US total wheat area being at a historical low, which if realised could provide a bullish sentiment to global wheat markets.

In Black Sea regions, the Russian Agriculture Ministry has proposed a limit on its grain exports for the remainder of the season in order to maintain domestic supplies during the coronavirus pandemic. This has been further backed by the Economic Ministry. The export limit is planned at 7.0Mt, around the level of total grain exports expected for the rest of the season. This proposal creates concern that the measures could be then extended into the new season, though no plans to do so have been voiced at this stage. In Ukraine, the government has announced it too would take measures on wheat exports if needed.

In the latest monthly International Grains Council (IGC) report released last week, production figures for total world grains in 2019/20 was lifted 3.0Mt to 2,175Mt, accounting for larger maize production in the EU.

The report also details first full estimates for the upcoming 2020/21 season. Total grains production is projected to reach a record 2,223Mt, up on last year by 2%. Demand for grains is expected to rise also, with tighter carry-over global stocks anticipated.

UK focus

Delivered cereals

Last week saw the pound strengthen against the euro and the dollar, limiting some gains. However, UK wheat futures rose to reach record highs for this season in the mid-week, before withdrawing slightly to close on Friday only slightly up. Despite reaching £165.70/t on Wednesday, old crop UK feed wheat futures (May-20) increased by £0.60/t on the week to Friday 27 March, closing at £159.30/t. New crop futures (Nov-20) reached a high of £175.50/t on Wednesday but decreases later meant the week-on-week increased by £1.00/t, to £169.45/t on Friday.

UK delivered cereal prices also benefitted from the futures rises, with feed wheat delivered into East Anglia (May-20) quoted at £166.00/t, a rise of £2.00/t, as at Thursday. Feed barley delivered into Avonmouth (May-20) was quoted at £139.00/t, a rise of £2.50/t, as at Thursday. The spread between wheat and barley remains relatively wide; this is due to the presence of imported maize and a relatively large supply of barley pressuring domestic markets.

In the short-term, disruptions to domestic logistics as a result of the coronavirus pandemic may likely affect local grain prices as haulage prices may well increase. Demand for some milling markets, such as food service and restaurants has reduced in light of the outbreak, with a swap to retail markets.

As we move into unprecedented territory with coronavirus, the UK grain industry has come together to provide advice on the steps to take when loading grain on farm, into port, or receiving deliveries of inputs. The coronavirus guidance for combinable crop deliveries and collections is available here.

 


Oilseeds

Oilseed Rape

Soyabeans

Gains in the value of the pound outweighed modest gains in Paris rapeseed futures. Although still up from 2019/20, a further reduction in the forecast for EU oilseed rape production by Strategie Grains to 17.59Mt continues to cement the continued net import outlook for 2020/21.

While the global oilseed complex continues to face a fundamentally well supplied market, logistical concerns and increased meal demand have offered some support.

Global oilseed markets

Global oilseed futures

The price of crude oil has continued to be under pressure, with Brent crude continuing to trade below $30/bbl last week. The downward path resumed once more by the end of the week to close on Friday below $25/bbl. With global oil demand drastically reduced due to the pandemic, oil prices are likely to remain under pressure for the foreseeable future, continuing to set a supressed tone for the entire vegetable oil complex. Tomorrow will see the USDA Prospective Plantings report, with pre report polls suggesting an increasing US soyabean area for 2020/21 for a continued well supplied market.

While the crude oil market has continued to exert pressure on the oil complex, the US soyabean market of beans, meal and oil recorded a degree of support last week. As discussed last week, not only the price of crude, but demand for ethanol has also fallen. This has resulted in the volume of maize being distilled reducing, decreasing the volume of by-product for animal feed and increasing soy meal demand.

From a protein and meal perspective, there is a global reliance upon Argentina for crushing and exporting soyameal. Close attention is being given to the logistics and crushing sector in Argentina, where a shut down or major disruption could have large availability implications. In recognition of the importance of the soyameal trade, the Argentine federal government has ordered that cargo trucks be allowed to reach plants and pass blockades. However, there are reports that this isn’t always being adhered to. While there has been a degree of support to the meal market due to logistical uncertainty, the meal sector is likely to remain under a degree of pressure in a fundamentally well supplied market unless concerns become reality.

Rapeseed focus

UK delivered oilseed prices

Although still up from 2019/20, a further reduction in the forecast for EU oilseed rape production by Strategie Grains to 17.59Mt continues to cement the continued net import outlook for 2020/21 (Reuters). The production outlook for EU oilseed rape production continues to keep the EU in an overall import requirement position. This will maintain the value of rapeseed at a premium to alternative vegetable oils in 2020/21.

The degree of support for soyameal and beans filtered into Paris rapeseed, with the May-20 contract gaining €7.50/t from Friday 20 March to Friday 27, closing at €356.50/t, up 2.15%.

However, the gains in the value of the pound relative to the euro, of 2.44%, outweighed the gains in Paris rapeseed futures. With a strengthening of sterling, domestic oilseed rape delivered prices fell week on week, with May-20 falling £3.00/t and so was quoted at £323.00/t on Friday 27.



More Market Reports