Jonathan Lane updates us on the wheat market and Will Ringrose updates the OSR market while ADM's latest YouTube video features a discussiion about the feed barley market at https://t.co/TfRI1FLlmu

WHEAT

Weather has moved centre-stage this week following winter storms in the US and a severe drop in temperatures seen there and across much of Northern Europe and the Black Sea region.

Most of these areas had sufficient protective snow cover so damage is believed to be minimal here, but it could be different where snow cover was low or non-existent.

US wheat rose about $3/t and then fell again as the trade tried to assess crop conditions.

Further uncertainly has emanated from Russia. The wheat export tax is now in operation and due to increase in March before the floating tax system is adopted in June, making forward pricing of Russian export wheat almost impossible, especially for new crop.

Russia is usually the world’s biggest wheat exporter over the July-September period. Unless the situation becomes more transparent, key importers may be forced to look elsewhere for supplies, underpinning new crop values.

Russia’s February exports of wheat, barley and maize will only fall slightly on the month to 3.1mln t, as a surge in wheat exports prior to the introduction of the wheat export tax will boost the monthly total.

In its monthly update, Strategie Grains increased the forecast for current season wheat exports from the EU and UK to 26.1mln t, reflecting a shift in demand away from Russia.

Soft wheat exports from the EU had reached 16.25mln t as of 14 Feb, down from 19.53mln t cleared by the same week last year.

Ukraine grain exports have reached 29.8mln t so far this season, down 20% on the year, with traders reported to have sold 13.16mln t of wheat, 12.21mln t of maize and 3.96mln t of barley.

In the UK, official data continues to show a slowing in domestic demand across all sectors – industrial, food and feed – due to lockdown restrictions. Although the UK is reported to have imported 1.42mln t of wheat to the end of December, a further 1mln t is expected to be needed during the second half of the marketing season to make up for harvest 2020’s dramatic shortfall.

This means the UK will have to remain at import parity. EU values are likely to remain supportive due to Russia’s export tax. That said, actual import requirements will depend on how current Covid restrictions prevail.

Looking ahead, Strategie Grains cut its forecast of the 2021 EU soft wheat crop to 129.6mln t, down fractionally from the 129.7mln t forecast last month.

Analyst IKAR said earlier in the week it had raised its estimate for Russia’s 2021 wheat crop by 1mln t to 78mln t, due to an improvement in weather conditions.

Australian farmers will harvest a record wheat crop in 2020/21 after heavy rains boosted yields in key producing regions, according to ABARES, which now estimates the crop at 33.3mln t.

OSR 

Outside markets were mixed over the week with US stocks mostly lower but crude oil higher again.

Additional news seems to be limited, with China only back from Chinese New Year yesterday and South America returning from celebrating carnival, reinvigorating some demand in Asian oil markets.

The weather pattern in South America hasn’t really changed, with rain still persisting in Brazil. There was some talk of rain in more distant forecasts, but time will tell if it materialises.

There's still talk of slow harvest progress in Brazil, reported at 22% complete in Mato Gross compared with 58% on average. The line-up for vessels waiting to be loaded in Brazil is growing. Demurrage bills won’t be cheap and early yields are still disappointing.

In the US, National Oilseed Processors Association crush figures showed a record for January at 184.6 mln bushels against expectations of 183 mln bushels, although weekly export figures were disappointing.

Malaysian palm traded sharply higher this week on the back of improved exports for February, despite increased import taxes in India. That said, prices did get back to highs on palm and soy oil before dropping.

Matif rapeseed rallied to new highs before dropping back yesterday on the back of weaker veg oil markets. At one point the Matif was trading above €463 on the May contract. Canadian canola still traded at new contract highs.

UK prices have also rallied and, despite firmer sterling, touched highs and farmer selling targets. Sterling has continued to firm to over 1.1500.