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

US prices are down $12/t on the week, pressured by risk-off mood and fears of a steep drop in medium and long-term demand for commodities amid the coronavirus epidemic.

USDA has forecast the US all-wheat sowing area for the 2020/21 season at 44.7mln acres, the lowest figure since records began in 1919.

However, the International Grains Council sees global grain production increasing 2% year on year, reaching a record 2.22bln t, with wheat production set to increase to 768mln tonnes.

Weather conditions in Brazil and Argentina remain favourable for fieldwork and crop development, although a need for greater rainfall in parts of Argentina will increase during April.

Russia’s agriculture ministry has proposed a quota for grain exports of 7mln tonnes during April-June 2020, to ‘help ensure stability in domestic food markets’. It is yet to be approved by President Putin.

Ukraine’s government is to limit wheat exports to 20.2mln t in 2020/21 to avoid a rise in domestic bread prices and to maintain supplies.

Kazakhstan will also introduce quotas on exports of wheat and flour, but lift its current ban on flour exports introduced this month.

On the demand side, Saudi Arabia plans to start importing at least 1.2mln t more wheat starting this month, despite strategic reserves exceeding 1mln t.

In addition, Morocco will extend its suspension of import duties on soft wheat for a further 45 days to 15 June. The aim is to ensure regular supplies and price stability amid prospects of lower domestic output.

European (PARIS) futures are down €4.5/t on the week, following the weaker global trend.

FranceAgriMer kept its estimate of this season’s soft wheat crop condition unchanged on the week at 63% good/excellent, still well below the 85% at the same time last year.

UK (London) futures are down over £10/t on the week, pressured by a weaker global outlook and a firmer UK pound.

In summary, the subject of food security has raised its profile in recent days as consumers load up on pasta and wheat-based products. Farm supply lines are becoming disrupted and certain countries are restricting agricultural exports to maintain domestic supply.

Difficulties moving grain within countries and across borders, coupled with increased buying, could exacerbate the impact of the pandemic on the global food markets, especially with 20%of the world’s population under lockdown measures

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

The macroeconomy continues to dominate the veg oil complex as the world continues to battle coronavirus.

This week USDA released its Prospective Plantings Report, pegging the soybean area at 83.5mln acres (33.8mln ha). That is below the average trade estimates of 85mln t but above last year’s 76.1m acres, which was reduced by flooding.

These figures were largely ignored by the trade as growers are now likely to favour soybeans over corn, due to the collapse in ethanol demand in the past month.

The Brazilian harvest is now 76% complete, up from 66% last week, falling back in line with previous seasons. In Argentina, reports have emerged that logistical restrictions are now easing, putting yet more pressure on the US soy complex.

In Asia, veg oil has endured a turbulent week as lockdown and travel restrictions across many countries reduced demand for veg oils.

In Europe, MATIF has enjoyed its most stable week since the pandemic began, with May futures rising €6 since last Wednesday. If one ignores currency fluctuation, old crop prices are still weighed upon by the ongoing effects of COVID-19.

Whilst some nearby food demand remains, there is significantly less demand from fast-food outlets and the biofuel industry. However, rumours of renewed Chinese buying interest did give the market some support earlier in the week.

Looking ahead to new crop, Strategie Grains has reduced its European rapeseed production estimate by 260,000t, to 17.59mln t. Although larger than last year’s harvest, this still points towards a large net import requirement from the likes of Ukraine and Australia.

In addition, recent cold weather in central and eastern Europe has raised some concern that crop production could be lower than anticipated. Plants are now out of winter dormancy, with daytime temperatures increasing. However, there is no snow cover to protect the crop from recent overnight freezing temperatures, which might be a potential threat.

That said, as long as the economic impact of coronavirus remains unknown, gains to new crop MATIF will continue to be capped.

In the UK, sterling has firmed against the euro this week, as investors gain confidence to reinvest into UK markets. Until it is known how coronavirus will change lives, economies and demand, there will continue to be a large amount of volatility across commodity markets and currency exchanges.