Farming News - Feed wheat and oilseed rape market update

Feed wheat and oilseed rape market update

11 Oct 2019
Frontdesk / Arable / Finance

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

US wheat prices ended up about $2/t on the week, after last night’s bearish USDA report on US corn supply and demand trimmed earlier gains.

The US corn numbers came as a bit of a surprise to the market, as a slight lowering of the planted and harvested area was negated by a rise in the yield projection, despite all the current debate over lateness of the crop and the weather.

Yesterday’s USDA report also confirmed that there is no shortage of wheat supply, raising both US stocks due to a predicted lower export figure as well as global inventories.

One downside is that Canadian spring wheat and canola harvests continued to be delayed, as wetter and colder weather keeps fieldwork to a minimum.

The Russian agriculture minister reported that the country expects its 2019 grain crop to total 120mln t, with a wheat crop of 78mln t. The ministry sees grain exports of 45mln t, including 36mln t of wheat, in the 2019/20 marketing season.

Ukrainian farmers had harvested 49.3mln t of grain as of 4 October with the ministry expecting the total 2019 grain crop to be in line with last year’s level of about 71mln t.

Egypt purchased 180,000t of Russian and 115,000t of Ukrainian wheat in its latest tender, although prices paid were slightly higher than its previous tender due to firmer global prices.

France’s ministry has raised its estimate of the country’s 2019 soft wheat harvest to 39.7mln t, up from 39.45mln t previously, confirming one of its largest-ever wheat crops.

EU (French) Matif wheat prices are up €3/t on the week, although off the two-month highs seen earlier this week, as the market dipped following yesterday’s USDA data release.

The UK’s wheat harvest for 2019 is provisionally seen at 16.28mln t, up 20% year on year, the farm ministry reported.

UK wheat exports for the first two months of the 2019/20 marketing season were reported at 151,012t, three times the volume of a year earlier, with imports down almost 60% on the year at 223,293t.

UK prices are marginally lower on the week due to a firmer pound reflecting positive vibes about a possible deal over the Irish border dispute.

As we have said, wheat fundamentals on their own don’t have a bullish story and needed help from a bullish corn story. USDA didn’t oblige yesterday and therefore the market ran into selling pressure as corn traded lower.

Barry Howard, ADM Agriculture’s head of oilseeds, comments on the OSR market

Last night’s USDA report is viewed as positive for soybeans. The US average yield was cut from 47.9 bu/acre last month to 46.9 this month, slightly below the average trade estimate.

2019/20 ending stocks were cut to 460m bu from 640 last month and below the average trade estimate of 496. Stocks are still ample, but the stocks-to-use ratio has fallen from 15.9% to 11.4%.

The USDA report left South American 2020 soybean production estimates unchanged, putting Brazil at 123mln t (117 last year) and Argentina at 55.3mln t (53 last year).

Rain and snow continues to delay the Canadian canola harvest, while In Australia, dry weather and high temperatures have led to further reductions to crop forecasts, with some traders now predicting 2-2.1mln t.

Having failed to break the previous high, we saw a wave of technical selling on the Matif in the last couple of days as funds reduce their positions.

Fundamentally nothing has changed on the EU rapeseed market with supplies looking tight in the new year.

UK rapeseed prices suffered the double whammy of weaker Matif and stronger sterling causing prices to fall sharply at the end of the week.