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

All markets have traded considerably higher over the past week as weather concerns relating to global corn and wheat production prospects have increased speculative buying.

Dry weather is causing nervousness over vast areas of key Northern Hemisphere wheat-growing regions as well as Brazil’s corn crop.

Drought-like conditions in the Southern and Northern Plains of the US and into Canada have analysts already rethinking acreage and yield potential. The very cold spell entrenched across the US is providing additional support due to its likely impact upon the winter wheat crop at the key heading stage.

In Europe, as the recent cold period eases, attention has shifted to ongoing dryness after little or no rain fell in France, Germany and the UK over the past few weeks, increasing concerns over crop stress.

Parts of the Black Sea region could also do with a drink, but conditions in Ukraine and Russia have been more favourable. Indeed, Ukraine’s 2021 grain harvest is seen increasing 13% year on year to 73.6mln t, including 27.6mln t of wheat, which should allow the country to increase grain exports to 54.2mln t, up from 45.6mln t this season.

However, Argentina is experiencing too much rain. Buenos Aires Grain Exchange reported the country’s 2020/21 corn harvest only 14% complete as of 15 April, compared with a five-year average of 25%.

Moving into May, winter wheat crops will be entering key development stages. In addition, this is a key month for spring crop sowing in the US, which is mostly dependent on adequate moisture supplies. Further extension of current weather conditions could have major consequences on final production levels.

As the adage says, ‘rain makes grain’ and currently that is what key Northern Hemisphere-producing regions around the globe need.

China sold 410,700t of wheat at an auction of state reverses last week. This was 10% of the total offered as restrictions were put in place allowing only end-users to bid for supplies.

Russia’s grain exports continue to slow with only 2.2mln t being forecast for April, down from 2.4mln t shipped during March, as the higher export tax lowers competitiveness.

Ukraine’s grain exports have fallen 23% on the year to 37.5mln t so far this season, with traders selling 14.7mln t of wheat, 18.1mln t of corn and 4.1mln t of barley.

Brazil has suspended import duties on corn and soy products until the end of the year in an attempt to slow inflationary pressure fanned by rising global commodity prices.

However, Morocco plans to increase customs duties on wheat imports to help domestic farmers benefit from an expected rise in production following two years of consecutive drought.

* Click here for more information on the grain market with ADM’s Jonathan Lane

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

CBOT soybeans meal and oil have made very strong weekly gains. By midweek, soybeans had risen 8.8% in seven trading sessions. The market is currently well supported thanks to weather issues and tight world supplies.

China continues to battle African swine fever and has put in more measures to prevent further spread. Old crop crush margins remain negative, but are improving. Margins for 2022 are positive and around 10 Brazilian cargoes have been bought over the last week. China's government has also published guidelines for the reduction of corn and soymeal usage in pigfeed and so they may start consuming more wheat.

Over the past week the US has been cold and dry. Some rain had been forecast, but never materialised. Next week is looking similar, although this weather is good for land work. It’s a very similar story in Canada, but there is a possibility of rain next week.

Weather in Argentina is looking wet and hampering harvest efforts. Currently only 7% of the soybean crop has been harvested compared with the 29% average.

Soybean futures are now at their highest levels since June 2013. Soy oil followed the trend as concerns of tight veg oil came to light. This was highlighted by knowledge that two Ukrainian shipments of rapeseed have been sold to Canadian buyers for August, which is almost unheard of.

Matif has had a very strong week. It came into the week with 10 straight day highs on the back of weather issues in Europe, where 50,000ha of French OSR may have been badly affected. It has continued this strength all week, however it may only be temporary, particularly if some rain comes into the forecast.

Canadian canola has also had a strong week. The Canadian agriculture ministry put its canola acreage at 8.75mln ha, up by 350,000ha from last year.

Asian markets have spent the week trading higher on the news of tight soy oil stocks. Palm oil dropped midweek due to fears of lack of Chinese demand, however it quickly rebounded to follow soy oil up.

Sterling had a strong start to the week, but soon began to fall due to the continuing poor global outlook, with Covid still dominating life in some large countries.