Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market

UK (London) futures are down around £3/t (May 20 position) on the week reflecting the fact that some planting progress has been made, but generally many areas remain waterlogged and far from ideal for drilling.

Current estimates are that about 50% of the UK’s intended winter wheat area has been sown, ranging from 0% in some regions to 100% in areas least affected by rain.

Some winter wheat drilling has taken place over the past drier week. This has been almost entirely on light and higher ground with some heavy land farmers closing the gate until spring.

Most traders and analysts are now busy trying to predict the potential UK area that will be planted and likely subsequent yields. Estimates for the 2020 wheat crop probably vary by 4mln t at present. The only thing we can say for certain is that output will be much lower than 2019.

EU (Paris) futures are up €2.50t/t on the week, supported by a firmer US market, a strong EU shipment programme and a further tranche of international buying that makes French wheat competitively priced.

Winter cereal sowing in France remains well behind the usual pace, according to farm office FranceAgriMer. It estimates soft wheat sowings at 72% complete, down from 92% a year earlier.

Strategie Grains has lowered its soft wheat area estimate for the next year’s EU harvest after heavy rains continue to disrupt fieldwork in western countries.

Further afield, US wheat prices are up $2/t on the week, supported by talk of declining Southern Hemisphere production, continued US export demand and a reported deterioration in US winter crop ratings.

Argentina’s wheat production continues to slide lower, with Buenos Aires Grain Exchange lowering its estimate to 18.5mln t from 18.8mln t last week, with just over 13% of the crop harvested.

Russia will boost exports of grain in the second half of the current marketing season despite the intensification of competition, according to the president of the Russian Grain Union.

Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market

The US soybean harvest is nearing completion with an estimated 91% done. Some rainfall in the forecast may delay progress.

Last week CBOT soybeans found support from better-than-expected export sales, although after a constructive trade conference call between China and the US on Saturday, renewed pessimism that a “Phase 1” deal would not be completed by the end of 2019 pushed soybeans down to an eight-week low.

China insists the US roll back existing tariffs, something the US is reluctant to do. There could be up to 3mln t of US soybeans waiting to be unloaded in China as of the middle of this week and, with no deal, the problem is unlikely to go away.

Weather in Argentina is forecast wet for the next 5-10 days. Planting was estimated to be 20% complete at the end of last week.  

The Canadian canola harvest is almost finished, alhough some areas have struggled to get the last 5% in the shed. Areas such as Alberta have had a decent amount of snow and it’s likely that the small percentage that’s left in the ground will be harvested in the spring. Farmer selling remains slow, due to optimism that China will eventually return to the market.

Matif rapeseed continued an upward trend this week, making fresh highs on the nearby positions before closing lower. Markets are still supported by firmer world veg oil prices and rumours of a biodiesel tax credit in Europe.

Although new cases of African Swine Flu in China have fallen, the disease has now been detected in Poland. One case quickly turned into 17 reported cases, all in wild boar. Measures are in place to stop it from spreading into neighbouring countries.

As mentioned in previous reports, the recent strength in sterling has continued to cap UK farm-gate prices.