Farming News - Market Update - New crop all about weather and politics

Market Update - New crop all about weather and politics

David Sheppard, Gleadell’s managing director, comments on the wheat market

Ongoing anxiety over the trade dispute between the US and China has continued to provide a backdrop of liquidation selling, especially in the corn and bean markets, which has spilled over into the wheat pit.

In addition, as the US winter wheat harvest progresses, and spring wheat crop ratings portray a very healthy crop, the Chicago market has been under pressure from traders unwinding their Kansas City/Minneapolis milling wheat positions.

EU prices have remained stable/supported on the week as the trade continues to focus on new crop prospects.

Egypt issued another August tender that secured 120,000t of Russian wheat, but with almost 1mln t offered between Russia and Romania, it is likely these origins will still be there when Egypt comes looking for any top-ups.

Weather is still providing some issues, with dry conditions across much of Western Europe, while rains are seen in the Ukrainian and Russian spring crop areas.

The ministry expects Russia to harvest a maximum of 100mln t of grain, due to adverse weather and delayed sowings, lower than many analysts’ forecasts.

However, the French crop is now being talked up to around 39mln t, and this will compensate lower production in Scandinavia, Denmark and some of the Balkan states.

UK old crop prices have eased over the week as trade sellers seem more willing to offer supplies to the market, although the towel has not yet been thrown in.

New crop prices have edged higher, mainly as a result of a weaker currency verses the US dollar and due to ideas that current UK weather conditions are not improving yield prospects.

Gleadell comment

In summary, we are now between crops, with old crop all about execution, and new crop all about weather and politics.

The fall in the US market continues to narrow the US/EU/Black Sea spreads, without bringing fresh demand to the US. And, based on the recent Egyptian tender, the value of French wheat would only place it into Algeria, a concern if the crop expectations are realised.

Otherwise, the commodity markets await US planting and Northern Hemisphere harvest data, whilst still operating under the ongoing, and seemingly hardening, US-China trade dispute.

Jonathan Lane, Gleadell’s trading director, comments on the OSR market

The global oilseeds market continues to be dominated by the ongoing trade discussions between the US and China.

The retaliatory imposition of tariffs on US soybeans imported into China has sent the CBOT soybean market into steep declines, as US traders try to work out how to price the 30mln of Chinese demand that now attracts a 25% tariff.

However, given the relatively tight global balance sheet, it could be argued that these losses are not justified from a fundamental standpoint, and it illustrates how political intervention can add significant issues to markets.

Rapeseed harvest is underway in the Black Sea, with yields being described as average. First cuts on crops in Eastern Poland are poor, and in France the crops harvested so far have been very variable. However, it is very early yet to get a true picture of what we can expect as a whole.

In the UK, the old crop market is over, with crushers largely shut down for annual maintenance.

The ongoing hot dry weather is pushing crop maturity, and some growers have been desiccating crops this week.