This weeks market movers: Grain market daily

• May-23 UK feed wheat futures closed at £241.00/t yesterday, down £5.00/t from Tuesday’s close. The Nov-23 contract also lost ground, closing at £229.15/t, down £2.00/t over the same period.
• Paris rapeseed futures (May-23) settled at €592.50/t yesterday, down €6.00/t from Tuesday’s close. Rapeseed prices followed the direction of soyabean markets yesterday, which were pressured by falls in crude oil, as well as concerns over global demand.

Global and European wheat futures lost ground again yesterday, following further pressure from competitive Russian exports, a mixed picture for US crop condition ratings, as well as global demand uncertainty.

Abundant Russian supply

As was covered in Tuesday’s Market Report and yesterday’s Grain Market Daily, Russia’s on-going large export campaign is adding pressure to wheat markets at the moment. With a record sized crop this year, a weaker rouble and relatively high global prices, Russia are expected to have near record wheat exports from now until the end of the season.

While there is no doubt ample supply of Russian wheat this season, how much they will actually export does come under question. Insurance of vessels and cargo may become an issue this year. According to Refinitiv, reinsurers have increased rates on some key business lines by as much as 200% from the start of this calendar year. Could this pose an issue for Russian exports? This will remain a watch point going forward.

US crop conditions

Over the Christmas period we saw global wheat futures supported by the possible impact that the extreme cold/dry conditions in the US may have on its wheat crop for harvest 2023. While the impact of these conditions is yet to be fully known, this week the USDA released its latest monthly crop ratings for key growing states, which sheds some light on the condition of the crops in the ground.

As at 1 January, 19% of the winter wheat crop in the Kansas (the largest winter wheat producing state) was rated as good/excellent, down from 21% at the end-November. Crop condition scores also fell in Kentucky, Montana, Nebraska, North Dakota and South Dakota. However, ratings improved on the month in Illinois, Oklahoma and Colorado, with the latter benefiting from the snowstorms as it improved soil moisture.

While some states have received more favourable weather this week, which has alleviated some concerns, dryness remains in the Southern Plains. US weather will remain a watch point going forward.

Global economic uncertainty

When China relaxed its strict COVID restrictions at the end of last year, there was optimism over an increase in demand from one of the world’s top importers. However, with COVID-19 cases rising in China, this optimism has been somewhat capped. This has added some pressure to global grain markets this week. Going forward, Chinese demand is a key watch point for both grains and oilseeds.

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