Farming News - EU cuts its yield estimate for wheat crop to 5.54t/ha down from 5.6t/ha in June
EU cuts its yield estimate for wheat crop to 5.54t/ha down from 5.6t/ha in June
Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market
Prices have drifted marginally lower over the past week as harvest progress limits the potential upside.
The US market remains balanced between trade talk of increased Chinese buying, after the country recently purchased two cargoes of US soft red winter wheat, and a favourable weather pattern for US spring crops.
A declining US dollar has made US exports look more attractive.
However, US maize prices have drifted lower. Near-ideal weather conditions during the pollination stage are expected to support talk of higher yields.
Growers generally remain reluctant sellers in key wheat-producing areas. This has underpinned cash levels across much of the EU/Black Sea region and especially in Russia, where exporters remain short against shipments.
Russian output is expected to increase. Official data shows the country planted a record 29.4mln ha of wheat for the 2020/21 season, the highest level since records began 25 years ago. IKAR raised its production forecast to 78mln t, mainly due to reports of improving yields in some areas.
Kazakhstan has raised its 2020 grain crop forecast to 20.5mln t, up from 18.0-18.5mln t.
The condition of the French wheat crop improved in the week ending 20 July. Harvest is reported as being 71% complete, compared with 47% last week and 55% at the same time last year.
Market consultant Agritel still expects France’s wheat crop to be among the smallest in 25 years, at 29.2mln t, after adverse weather impacted upon both area and yield.
EU crop monitoring unit MARS has again cut its yield estimate for this season’s EU wheat crop to 5.54t/ha, down from 5.6t/ha in June. Maize and barley yields were increased.
In the UK some limited harvesting has taken place. Merchant short-covering has supported spot delivery premiums as farmers concentrate on harvest rather than grain sales.
However, as harvest activity increases and supplies become more freely available, spot premiums will erode. Domestic demand remains sluggish across all sectors.
Looking further afield, dryness in northern and central parts of Argentina is affecting development of the recently planted wheat crop and may result in further declines of the estimated planted area.
Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market
Despite the continued tension between the US and China, CBOT soybeans were supported by Chinese buying for the tenth day in a row, with further new crop parcels being announced at the start of the week.
Prices have been pressured over the past few days as Chinese buying dried up and favourable weather led to improved soybean crop conditions. These rose 3% this week to 72% good/excellent compared with the 69% expected.
Palm oil fell sharply two days in a row, with traders profit taking from its recent rally. Palm oil had extended gains against soy oil over recent weeks and the spread between the two looked overdone. Meanwhile Indonesia estimated 2020 biodiesel demand to be 2.19 bln gals compared with 2.54 bln gals two weeks ago.
Harvest is progressing in Europe. August futures go off the board at the end of the month while November Matif rapeseed futures continue to trade within a €5 trading range and struggle to break the trend. Whilst veg oil prices were pressured, the biofuel market has seen increased demand over the last week. However, variable yields are reported and farmer selling is slow.
UK prices were back at highs, but pressured yesterday by the small uplift in sterling, which closed above 1.1000 for the first time in four days.