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

US prices are down about $6/t on the week as the fall-out from the coronavirus outbreak in China weighs on the commodity markets. Traders fear it could dampen Chinese demand and weaken its economy.

Trade reports surfaced that China has purchased roughly 1mln t of wheat over the past two months from Australia, Canada and France, in order to fill quotas from the WTO, which was deemed as negative to the US market.

South American weather has turned more favourable, adding to the negative sentiment. Good rains in the forecast are supporting estimates for a record Brazilian soybean crop.

Russia’s agriculture ministry stated it would consider offering annual export quotas for grain exports to help manage its domestic supply, although it reiterated there was no reason to cut its 2019/20 export forecast of 45mln t, including 36mln t of wheat.

UK prices are down £4/t on the week following the weaker global trend and the relative strength of the pound.

With UK prices currently at import parity, action on the global grain exchanges, political events and currency fluctuations will now have a greater influence on the future direction of UK farm values.

The UK’s departure from the EU on 31 January is not expected to change the UK’s grain flows into/out of the EU due to the transition period which runs until 31 December 2020. What happens after that date will depend on EU/UK trade negotiations that are due to start soon.

EU wheat prices also slipped this week, by about €4/t. Wheat exports were reported at 15.9mln t as of 26 January, 69% above same time last year.

Continued transport strikes in France are still seen heavily disrupting the movement of grain, leaving exporters little option but to switch the loading of vessels to either Germany, or the Baltic states. Tunisia’s state grain agency has asked one of its main grain suppliers to avoid importing French wheat due to continuing strikes at French ports.

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

Coronavirus is the topic of the week. Although fundamentally nothing has changed in the agricultural markets, fears over the Chinese economy has put pressure on prices across the board.

The outbreak has sparked fear into global markets, whilst the Chinese government has already warned of a possible 1% fall in China’s GDP because of the epidemic.

As such, markets traded lower for most of the week. Crude oil prices fell to the lowest level since October, with west Texas crude nearly 20% off recent highs. CBOT soybeans have struggled to find support this week and traded at eight-week lows.

Chinese buyers are out of the market for at least a week, if not longer. It is unlikely the market will see any pick-up in demand until things return to normal.

Weather remains hot in some parts of Argentina, but on the whole is non-threatening in other parts of South America and unlikely to change crop estimates.

In Brazil the soybean harvest has picked up, with progress estimated at 4% complete compared with 13% last year.

Malaysian palm oil prices have struggled to make gains on a lack of Indian and Chinese demand. As such, both palm oil and soy oil will end the week on a weaker tone. Malaysian palm oil futures opened, after the weekend’s celebrations, to trade limits down, playing catch up with outside markets. Futures closed 10% lower on the day, the largest daily fall in 11 years, and 18% down since 10 January.

Closer to home, Matif rapeseed prices remain volatile. Whilst regaining some of the last week’s losses, prices remain under pressure from lower oil markets.

Canadian canola traded at six-week lows and Matif traded down to seven-week lows, 5% off recent highs.

Here in the UK, sterling continues to have a big influence over rapeseed prices. UK base rates were rather unexpectedly kept unchanged on Thursday, strengthening the pound.