Tuesday, 15 September 2020
Market commentary -
- UK feed wheat futures (Nov-20) closed at £176.45/t yesterday, down £0.55/t on 11 September, but still up £5.65/t on Monday of the previous week.
- MARS (EU crop monitoring Service) has reduced the EU maize yield forecast to 7.83t/ha, a decrease of 0.18t/ha (2.2%) on the year due to droughts in some South-Eastern European countries. That said, the yield estimate remains 3.3% above the five year average.
- Chinese imports of US maize remain high, the US have now agreed the biggest sale of US Maize (350,000 tonnes) since 1 September.
What’s happening in Canada, a key wheat exporter to the UK?
Yesterday, Statistics Canada released their revised crop production estimates. The release estimated total wheat production at 34.1Mt an increase of 5.6% year-on-year, but 1.6Mt down on last month’s estimate. The increase is primarily driven by an increase in durum and winter wheat, with spring wheat down 0.5Mt year-on-year.
The Canadian production estimate for all wheat is the second largest on record. Meanwhile the estimate for Canadian spring wheat, at 25.2Mt is the third largest in the last 10 years.
The winter wheat harvest is now nearly complete across Canada. The spring wheat harvest is currently at around 67% completion in Manitoba and 14% in Alberta (week ending 8 Sept.). In Saskatchewan the spring wheat harvest is 32% complete (7 Sept.).
Canada are also seeing a strong year for other crops, maize (+4.7%) and oat (+6.5%) production is also expected to increase significantly year-on-year.
Despite this increase in production for the 2020/21 harvest year, export forecasts have not risen to the same extent although remaining up year-on-year. A reduction in carry-over stocks has limited the surplus that Canada is able to export. This linked with the large global availability of wheat due to high production levels expected in Australia and Russia, may limit the value of exports.
What does this mean for the UK?
Canada already exports a significant amount of wheat to the UK each year, and this trade is likely to continue through 2020/21. Demand from the UK for high quality wheat imports is still likely to be high, this is especially true given the lower protein seen in UK wheat samples so far this season. In July, the UK imported 72Kt of Canadian wheat.
Close attention will be paid to the quality of the Canadian spring wheat crop as harvest progresses.
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