Farming News - ADM Agriculture Wheat and Oilseed Rape Market Report

ADM Agriculture Wheat and Oilseed Rape Market Report

30 Oct 2020
Frontdesk / Arable / Finance

Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the Wheat Market

The return of much-needed rain in key producing areas has resulted in a sell-off of long positions built up over several weeks, when ongoing concerns over dryness pushed markets upwards.

It could be argued that bullish sentiments towards the 2021 crop still remain, although traders are also becoming more concerned over a potential fall in industrial, food, and feed demand due to the renewed escalation in the global Covid-19 epidemic.

In more detail, US wheat prices have fallen just over $10/t week on week as a more favourable weather outlook for the US and Black Sea region has resulted in long-holders liquidating their position.

UK prices have taken a step back, but concerns remain over balancing the supply and demand equation this season. 

Weather conditions have improved the outlook for Russia’s 2021 grain crop, after several regions received rain last week. Farmers are reported to have sown winter grains on 94% of the intended area of 18mln ha.

In Ukraine, growers have sown winter crops on 7.3mln ha, 89% of the intended total area.

Argentina still remains dry, and its upcoming wheat crop is now being projected at below 18mln t, against earlier season optimism of a record 21mln t crop, mainly due to continued lack of moisture across much of the country’s grain belt.

As far as the 2020 crop elsewhere is concerned, Russia has harvested 131mln t of grain (before drying/cleaning) from 94% of the area, with average yields of 2.89t/ha, according to official data.

Ukraine has harvested 50.5mln t of grain from 12.9mln ha, or 84% of the total area. The country is no longer planning to review its current export quota, with traders/government agreed on a cap of 17.5mln t for wheat. So far this season just over 10mln t has been shipped.

The country’s total grain exports so far have fallen 16% on the year to 15mln t, mainly due to a sharp reduction in maize exports, reported at 1.54mln t compared with 3.59mln t this time last year.

Egypt’s state buyer continues to purchase wheat on the international market, buying 165,000t recently from Russia.

Algeria recently purchased near 600,000t of optional-origin wheat, with European traders thankful that this should not include Russian wheat.

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

Agri-commodities have followed outside markets lower with Chicago soybeans, soymeal and soy oil all closing sharply lower on the week.

US soybean harvest progress fell short of expectations yesterday, with USDA pegging progress at 83% compared with trade estimates closer to 86% (76% last week). US weather across the Midwest looks drier, which will help those who need to finish harvest.

China seems absent from the market, but USDA announced further sales to Egypt and unknown destinations.

South American weather continues to improve, with sporadic rain heading across central Brazil, but temperatures vary. Market consultancy AgRural estimated soybean plantings in Brazil to be 23%, up from 8% last week.

The market seems to have run out of steam in the short term after touching four-year highs, and outside market pressure prevails. Managed money reduced positions over the last few days, but is still estimated to be 248,000 contracts long.

Veg oils remain firm with Chinese demand still buoyant. There are supply concerns in Malaysia, but the recent rise in Covid-19 cases is a concern for demand going forward.

In Australia, rapeseed harvest is progressing well. Research organisation ABARES estimates the 2020/21 crop at 3.4mln t, compared with 2.33ml t last harvest.

All EU markets fell yesterday as talks of renewed national lockdowns were announced for Germany and France as Covid-19 cases rise.

EU rapeseed prices tumbled. February futures are down €14, trading to levels not seen since the end of September.

Sterling remains volatile and will continue to do so as we get closer to the Brexit deadline, but recent strength is pressuring UK prices.