Weighing up this week’s market movers: Grain market daily

Thursday, 18 August 2022

Market commentary

  • Nov-22 UK feed wheat futures settled at £260.00/t yesterday, down £4.00/t from Tuesdays close. As at 12:30pm today, Nov-22 UK feed wheat futures were trading down by £7.00/t from yesterdays close – more on what is pressuring prices below.
  • Nov-22 Paris rapeseed futures closed at €615.00/t on Wednesday, down €9.50/t over the session yesterday.

Weighing up this week’s market movers

This week we have seen UK feed wheat futures slip, following the sentiment of wider global markets. Improved weather prospects in the US, more exports from Ukraine, an even bigger Russian wheat crop and Chinese demand concerns have all pressured markets.

Below is a round up of these market movers, along with the impact each may have on prices going forward.

US weather

As has been well reported of late, the hot dry weather across the US maize belt has led to concerns over the conditions of crops for this harvest. However, this week some of these worries have subsided as there has been some rainfall in these areas. Rains are expected to continue over the next week. However, whether there will be enough rain to alleviate concerns completely is unknown, given dry weather over recent key development months and trimmed crop conditions. US weather will continue to be a watch point for markets over the next few weeks.

Ukraine exports

Yesterday it was reported that Ukraine was expecting the largest convoy of vessels to load grain this week since the opening of the ‘grain corridor’ a few weeks ago (Refinitiv). Five ships are expected to arrive at the Chornomorsk port to be loaded with over 70Kt of grains and oilseeds this week. This morning it has been reported that one of those vessels has been loaded with maize and has now left port. This takes the total number of shipments to leave Ukraine since the export deal was struck to 25.

Exports are likely to continue to leave Ukraine, which will continue to add pressure to prices or act as a ceiling for any gains. However, it is important to note that Ukrainian output this season has been considerably affected by the ongoing war, which will have an impact on the amount of grain that is available to be shipped. Furthermore, bombing in Odessa remains something to watch, with the latest missile attacks yesterday.

Chinese demand

On Monday, China’s central bank cut key interest rates for the second time this year. They also withdrew cash from the system to try and support the economy, following the impact of COVID. This news sparked concerns over China’s economic growth and in turn demand for commodities. With China one of the worlds largest importers of agricultural commodities, a downturn in Chinese demand would weigh on markets. This will be a watch point going forward.

Russian wheat output

Russian wheat output for 2022 has been revised up once again, in the latest forecast released on Tuesday by consultancy SovEcon. Record yields and an improved spring wheat outlook (from recent rain) has led to production being revised up 3.8Mt from previous estimates, to 94.7Mt.

While Russia is expecting a bumper crop this year, how much impact this has on the wider market is under question. Russian wheat exports are reportedly slow and are expected to stay that way according to SovEcon, with insurers and shippers remaining wary (Refinitiv). This situation may change, remaining a watchpoint going forward.

Sign up for regular updates

You can subscribe to receive Grain Market Daily straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.

Visit the Keep in touch page

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at info@ahdb.org.uk  © Agriculture and Horticulture Development Board. All rights reserved.