Farming News - ADM Agriculture Wheat and Oilseed Rape Market Report

ADM Agriculture Wheat and Oilseed Rape Market Report

19 Jun 2020
Frontdesk / Arable / Finance

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

Weather, harvest progress and news regarding Russian exports have continued to put pressure on markets this week.

US wheat prices as of Thursday afternoon were down $4/t on the week. NASS reports the winter wheat harvest at 15% complete, and the weather outlook is favourable for further good progress and for spring crop development .

However, talk of recent crop stress on corn and spring wheat crops may limit the downside.

Weather in the UK, Europe and Black Sea region has turned wetter over the past few weeks. This has benefited crops in some areas.

Farm bureau FranceAgriMer estimates 56% of France’s wheat crop was in good/excellent condition, unchanged on the week after recent rains helped stabilise the crop.

But the EU’s crop monitoring unit MARS has again cut its yield estimate of the EU wheat crop, reflecting that rain has come too late for some areas. It now stands at 5.6t/ha, down from 5.72t/ha last month and 6.6% lower than last year.

Despite this, the main market driver will be the expectation of increased Russian supplies, following confirmation that exports will not be subject to quotas during the first half of the coming marketing season.

Official estmates peg Russia’s 2020/21 grain exports at 45mln t from a total production of 122.5mln t of grain, including 75mln t of wheat.

The move may entice importers to purchase more grain from what is normally the cheapest originator in the world, particularly as markets to weaken into the harvest period.EU (Paris) new crop futures are down around €2/t on the week as a result of these factors, while UK (London) new crop futures are down around £2/t.

Adding to the bearish outlook, Ukraine’s farm ministry expects the grain harvest will exceed 68mln t, compared with previous forecast of 65-68mln t and last year’s 75mln t.

China will see a bumper harvest of grains this summer thanks to a stable grain acreage and improved crop yields, while Indian farmers are set to speed up the planting of summer crops due to favourable monsoon rains.

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

Reported spikes of coronavirus cases in the US and East Asia has left a sense of caution in markets over the past week.

Crude oil seems to be at a crossroads, although promising demand forecasts and the continued supply cut have kept Brent crude futures just above $40 per barrel.

Chinese purchases of US soybeans are keeping the market underpinned as continued weakness in the dollar is helping export competitiveness. However, the risk-off approach of outside markets and good crop conditions for most of the country has left CBOT soybean futures just 2c higher than Friday’s close.

In Canada plantings are virtually completed with no issues to report. Farmers hope for favourable weather over the next few weeks to establish the crop.

In Australia, most regions received rain recently. On the whole, crops now look in good condition.

Palm oil futures began the week firm on expectations of further export sales and the recovery in the value of rival oils. However, concerns over new covid infections have weighed heavily on sentiment.

On Monday the European Union's crop monitoring service MARS cut EU 2020 rapeseed yield prospects from 2.95t/ha to 2.90t/ha. A small crop has long been expected so it is likely to have been priced in.

Matif has largely moved sideways over the week, with August futures closing Wednesday at €375.75, as Monday.

In the UK, a slightly weaker pound has given some stability to rapeseed prices. As attention becomes more focused on new crop, rainfall has increased just in time to prevent some growers in the south spraying off their crop at the end of this week.