Jonathan Lane, comments on the wheat market

US wheat has fallen $15/t on the week as a lack of fresh bullish news over the Russia/Ukraine crisis leaves markets starved of support.

EU and UK wheat prices have followed the global trend. MATIF is down €14/t week on week, and London down £6.50/t, although old crop delivered premiums have firmed.

EU wheat is competitively priced, although recent tenders saw Black Sea wheat offered to Egypt and Algeria (which again snubbed French supplies), despite all the talk of reduced exports due to quotas and a possible invasion of Ukraine.

Egypt bought 420,000t – 180,000t from Ukraine, 120,000t from Russia and 120,000t from Romania – with shipment dates 5-15 March and 16-26 March.

Russian wheat shipments amounted to 23.6 mln t as of 27 Jan, down 21% year on year. Total grain exports are reported at 33.1 mln t.

EU wheat shipments reached 17.5mln tonnes at the end of January. While slightly ahead of the figure at the same point last year, they show no sign of achieving USDA’s 37.5mln t projection. The EU Commission now sees EU wheat stockpiles for the 2021/22 season at 13.3 mln t, up slightly on the month.

France’s farm ministry recently raised its forecast of the country’s season-end wheat stocks to a six-year high. Although the ministry is still working with a 9mln t export figure, France has only shipped 5mln t. Unless the pace picks up, French stocks could increase further, perhaps to 5mln t, almost double last year’s level.

This would put renewed pressure on Matif values and prospects of a big French and EU crop would add to the negative tone. EU crop monitoring unit MARS is reporting relatively little winter kill and no serious weather threat at present.

However, the need to ration demand of higher quality wheat for the current season remains, especially if any export demand switches from the Black Sea into the EU as a result of further escalation of tensions between Russia and Ukraine.

Market volatility will remain high while Putin has his troops on the Ukrainian border. But, as fresh bullish inputs fade, wheat rallies will struggle due to the bearish EU crop fundamentals.

Will Ringrose,comments on the OSR market

Outside markets are mixed following the month-end and recent developments in Russia/Ukraine.

CBOT soybeans have rallied on a daily basis to within touching distance of $16/bushel.

USDA has announced further sales of US soybeans this week to China and an unknown destination.

South American crop prospects continue to diminish. The weather is now turning dry again across the south of Brazil, Argentina and Paraguay, with little rain in the forecast.

Analyst SAFRAS estimates the Brazilian harvest at 11.3% complete compared with 5.5% average. Initial yields are below expectations.

Markets still look heavily overbought in the short-term, with USDA report to come next Wednesday. 

Crude oil has traded back to recent highs., while palm oil has come off record highs set last week following the curb in exports from Indonesia. Soy-oil has eased lower on higher figures from the US Environmental Protection Agency and will follow the wider complex.

In Canada, canola prices are still trading above $1000, but struggled to touch contract highs again. 

MATIF rapeseed started the week firmer, before prices fell back sharply on Wednesdays’ session. 

Rapeseed oil is struggling to buy additional demand and the increase in seed supply is starting to weigh on prices.

Russia will implement a higher export tax on sunflower oil in March.