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

The recent USDA report continued to show abundant supplies of wheat, and although USDA remains upbeat regarding US export potential, higher EU and Russian production will add to those countries’ exportable surpluses, keeping competition fierce as we enter the second half of the marketing season.

USDA trimmed its forecast for US closing wheat stocks but increased the global figure, offsetting lower production in Canada, Argentina and Australia with gains in the EU, Russia and China.

The report also raised corn production and stocks within China – those elsewhere were  virtually unchanged.

Talk that the US and China have agreed a trade deal in principle lifted prices on Thursday evening.

France’s farm ministry estimated the country’s winter soft wheat area for the 2020 harvest would slip 4.8% on the year to 4.73mln ha, a 17-year low.

EU grain lobby Coceral raised its EU production estimate for 2019 to 145mln t from 143.3mln t in September, some 18mln t more than was harvested in 2018.

Egypt’s state buyer GASC purchased 355,000t of wheat (120,000 French, 120,000 Russian, 60,000 Romanian and 60,000 Ukrainian) for Feb 5-15 shipment, paying $2.50/t more than last week, a season’s high.

EU (Paris) futures are down €1.50/t on the week, although cash levels remain underpinned by continued export demand and limited producer selling.

UK (London) futures were firmer on Thursday, lifted by the stronger Chicago market. We can expect currency to remain volatile for a while yet as the election result is digested..

The AHDB crop development report issued on Tuesday presented a bleak picture of UK winter wheat, barley and oilseed rape plantings and crop condition. Only 60% of the intended wheat area had been planted by 1 Dec .

Whilst more will have been planted since that date, it is the condition of the crop in the ground, almost as much as the lack of area planted, that is of serious concern.

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

Hemswell, Lincolnshire, 12 December 2019

World vegoil prices continue to support the oilseed complex. However, after a strong start to the week, markets are struggling to hold on to gains made in the last few sessions.

Tuesday’s USDA WASDE report widely fell within trade estimates for US and global ending stocks for the current season and South American soybean production.

Trade negotiations between US and Chinese officials are progressing, with news late on Thursday that a deal has been reached in principle.

Brazilian soybean plantings are estimated at 90% complete amid benign weather, whilst Argentina planting just passed the halfway mark. Weather in Argentina will be closely watched as temperatures rise in a number of areas. Cooler temperatures and rainfall in the long-range forecast will help if they materialise.

The overall tightness in world vegoil stocks continues to support rapeseed prices. This week the Malaysian Palm Oil Board released production figures below trade estimates. With production at a three-month low, palm prices exceeded soybean oil prices for the first time in nine years. 

In Canada, Stats Can released its latest 2019/20 crop estimates at 18.6mln t (previously 19.4mln t), its lowest estimate since 2015 and below trade estimates. In Australia, harvest is almost complete.

EU rapeseed prices touched highs, close to €400/t, on Tuesday, before following vegoil prices lower towards the end of the week.

The trade continues to keep a close eye on next season’s rapeseed crop. Some are estimating French plantings lower than first forecast and there is concern over ongoing dryness in the Black Sea.

It was also reported this week that France has banned up to 36 glyphosate-based weed killer products from the end of 2020, ruling there is insufficient data to exclude health risks.

In the UK, the market can expect some currency-induced volatility after last night’s results.