Farming News - A Weekly look at the Wheat and OSR Markets
A Weekly look at the Wheat and OSR Markets
The US market is unchanged on the week. While the spill-over from firmer soy/corn markets has provided some support, wheat markets are still suffering from a general lack of international demand, with shipments still running 15% lower year on year.
European prices are slightly weaker on the week as the euro/dollar exchange provided resistance to higher prices.
Egypt has issued an international tender for today, which will be of great interest as the Russian agriculture minister and exporters are due to meet on Friday (21st) to discuss the current and, more importantly to the markets, future export aspirations.
As we have mentioned in previous reports, the market is waiting for signs of a slowdown in Russian exports. Results of both the above events will be closely watched, as any official confirmation would be deemed as a positive factor for US supplies.
The trade is also wary of a possible Algerian tender next week. Given recent rises in Argentinian export values and logistical issues, that would favour French supplies.
The UK market is up about £1/t on the week as currency slips back below €1.11 on the ongoing Brexit saga.
On Thursday morning (20th) DEFRA released its 2018 UK wheat crop production figure. At 13.95mln t, this would represent a 6% decline year on year despite a small increase in harvested area.
While the release will only provide a slight adjustment to the overall UK balance sheet, the ongoing political issues surrounding Brexit will drive currency and thus farm values, although the winter recess of Parliament may provide a few needed weeks of stability.
David Sheppard Gleadell's Managing Director said: "In summary, the festive wind-down is in full swing, although the markets will need to monitor events closely for any signs of the expected shift in international demand, which in the long-term may provide support for both EU and US prices."
The resurrection of China buying US soybeans has provided some support to prices in recent days.
Reports suggested that deals have been struck for upwards of 5mln t, following the truce to the disruptive import taxations between the two key trading nations at the G20 summit in November.
The rapeseed market in Europe has been slow and rangebound in past weeks, with the front month February contract stuck in a €5 range.
The fundamentals of the market still point towards the need for higher imports, following the sharp decline in production this year and another expected slump in output from the 2019 harvest, due to reduced winter plantings in key producing countries.
However, the UK market will continue to be heavily influenced by fluctuations in currency. Given the current political uncertainty, it makes it difficult to call where farm-gate prices will eventually end up. With this in mind, today’s old crop values still look good for UK farmers.