Tuesday, 24 September 2019
- Grain markets generally drifted sideways yesterday.
- UK feed wheat futures (Nov-19) closed at £136.25/t, £0.25/t gain.
- Paris milling wheat futures (Dec-19) followed suit, gaining just €0.50/t to close at €171.75/t.
- Currently there is little fresh news entering the market, allowing prices to drift slightly. US HRS wheat harvests are one to watch due to adverse weather hampering progress and potentially damaging quality.
Where are rapeseed prices going?
Physical delivered oilseed rape prices for November delivery into Erith have been on an upward trend from March to August. This isn’t surprising as Paris rapeseed futures (Nov-19) have also been following a similar trend. However, there have been times where Paris futures have dropped off and UK physical prices have firmed, and more recently we have seen the opposite.
Over the last 4 weeks, UK physical oilseed rape prices have seen continued losses. From Friday 23 August to Friday 20 September, oilseed rape delivered to Erith in November has lost £7.00/t. Over the same period, Paris oilseed rape futures (Nov-19) have gained €11.25/t.
Why has this happened? Sterling.
The pound has been heading downhill for some time, reaching its lowest value against the euro since 2009 in early August. This supported physical UK prices somewhat, counteracting the drops in Paris futures at times. However since 9 August, the pound has strengthened by over 5%, closing yesterday at £1=€1.1303. This has dampened any price increases, counteracting recent Paris futures gains.
Is there any support out there?
US soyabean prices have been under pressure for some time. Large US stocks and a continued trade dispute between the US and China, the largest soyabean purchaser, have driven this. There has been some recent optimism around a trade agreement between the two, with deputy-level talks described as “productive”.
In addition, there have been some recent purchases of US soyabeans from Chinese traders. Yesterday, reports state that China purchased 600Kt of US soyabeans for shipment in October to December. This is following 600Kt of purchases the previous week.
This trade optimism is coupled with bad weather prospects in the US causing concern for the developing crop. Last night’s USDA crop progress report showed soyabean crops had maintained condition from last week, but development is well behind last year and the 5-year average.
These two factors together could lift US soyabean prices, which may offer further support to oilseed rape.
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