Farming News - ADM Agriculture Wheat and Oilseed Rape Market Report

ADM Agriculture Wheat and Oilseed Rape Market Report

03 Sep 2021
Frontdesk / Arable

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

Hemswell, Lincolnshire, 2 September 2021


The UK harvest continues to progress with results showing major regional differences in yields, specific weight and quality. 


It is very hard to get a true picture of crop size or quality at this stage. Spot demand continues to be evident for dry, available wheat of all grades and, to add to what has been a drawn-out frustrating harvest, a general lack of trucks is an ongoing issue for our sector as it is across the economy.


After trading near £200 earlier in the month, UK November new crop futures have been pressured by recent weakness in both the US and European markets.


Data for the UK 2020/21 marketing season is now complete, and even with wheat imports reported at just under 2.5mln t, the carry-out was projected at a historically low figure of just under 1.1mln t.


This was due to an upsurge in animal and industrial usage during the last quarter of the marketing year as travel and social restrictions were slowly lifted.


This coincided with tightness in the UK market during July and early August. However, spot premiums for ready-to-move wheat have steadily declined since.


Looking at 2021/22, Defra has pegged the provisional English wheat crop area at 1.624mln ha, lower than most trade views. This suggests a crop of slightly below 15mln t.


Given the expected increase in domestic demand, this would leave a more normal carry-out and an exportable surplus at best of just under 500,000t, which is certainly manageable.


Earlier indications suggested the UK could tap into some lower milling quality exports given the demise of this season’s French wheat harvest, but reports show UK quality is generally lower on the year, especially in the south.


Until final yields and production can be obtained, UK futures are expected to follow the French market. With prices at historically high levels, we would still promote a little-and-often selling strategy to growers.


Looking further afield, US markets have continued to weaken as tropical storm Ida is expected to slow grain exports from the Gulf region.


StatsCan reported Canadian all-wheat production for 2021 at 22.95mln t, down 35% on the year and the lowest for 14 years.


SovEcon has cut its forecast for Russian wheat exports to 33.9mln t, due to lower production.


The International Grains Council has trimmed 2021 global wheat production, while reducing global grain stocks to their lowest level in seven years.


France’s soft wheat harvest was 96% complete as of 23 August as traders start to address the quality issue of this season’s crop.


Most global markets will continue to be driven by events in the US, as slower exports and favourable rains weigh on prices. European markets will follow to an extent, but are more focused on quality issues for now.