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

Markets continued to trade higher as Russia’s invasion of Ukraine prompts fears of severe shortages of exportable wheat.

Ukrainian ports will stay closed until the invasion ends and maritime security can be restored.

Continued uncertainty over events and their effect on Black Sea grain exports, along with potential export washouts and invoking of force majeure clauses, continue to support the markets.

Exporters and buyers are rushing to book EU supplies to replace lost Ukrainian exports.

Over the past week the US market has traded up $64/t, while France’s MATIF has risen €47/t (both May 22 positions).

The UK continues to follow these chaotic grain markets. London ICE (May) gained £34/t over the week, less than other exchanges which has allowed the UK to become export competitive.

The EU Commission has received an official request to allow the import of GM maize for inclusion into animal feed to alleviate shortness of supply and higher prices.

The commission has also commented that EU consumers should brace themselves for higher grain prices, and that growers should expect higher fertiliser costs due to reduced imports from the Black Sea region.

Egypt cancelled a snap wheat tender due to the lack of suitable offers and soaring prices, although many thought they were just testing the water.

Indonesian flour mills will start seeking alternative sources of wheat amid the escalating crisis.

Turning to more usual fundamentals, the condition of the US winter wheat crop continues to deteriorate in Kansas and Texas, with the crop rated 38% and 75% poor or very poor respectively.

Conversely, in Australia ABARES reports that this year’s record wheat crop just keeps getting bigger, now seen at 36.6mln t, up 5.5% above its previous estimate.

Morocco more than doubled its wheat imports during January to 805,000t as severe drought hits the country.

In summary, we can expect the huge volatility to continue, with the only certainty in the markets being uncertainty.

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

All markets remain focused on the unsettling events between Russia and Ukraine and continue to build in significant risk premium.

CBOT soybeans continued to appreciate, trading up more than $17 this week.

Matif May 22 rapeseed prices closed €825.75 on Tuesday, before slipping about €22 Wednesday and moving up again Thursday afternoon. New crop hit record highs, surpassing levels previously traded on the February futures.

Daily trading ranges have been the largest ever seen. Black Sea supplies remain a concern, especially of sunflower oil for old and new crop. Old crop logistics are being affected and new crop planting is likely to be delayed or postponed. Markets will remain extremely volatile until the trade figures out a way to solve the void.

Rain is forecast in Argentina, although with temperatures above normal, whilst central parts of Brazil and Paraguay remain dry. Private forecasts are still being reduced, with Stone-X revising its Brazilian soybean crop to 121mln t against USDA’s 134mln t. Some estimates are as low as 119.5mln t.

China has returned to the US soybean market this week, on both old and new crop. There were also reports of sales to unknown destinations which helps support prices.

Energy markets have soared to new highs. WTI crude oil traded at $116/barrel this week; gas and oil price rises are likely to have a huge effect on the market going forward.

Veg oil prices followed with Malaysian palm oil futures rallying to record highs, before taking some profit back in Wednesday’s session, falling 1.5% during the day.

Canadian canola prices trade at record levels this week before profit taking on Wednesday.

In Australia ABARES estimates the 2022 canola crop at 6.35mln t, which is still behind some predictions closer to 7mln t.