Wheat

The latest USDA report came up with few surprises for wheat. Higher Russian supplies and lower Australian crop estimates were the main features, as global end-season stocks were estimated at a hefty 263 mln t.

To coin a phrase, there is no shortage of wheat in the world. Estimates of French wheat production were raised to just under 38 mln t, approximately 10 mln t more than in 2016.

The French need to export more than 10 mln t outside the EU this season, double the amount shipped last season. This represents a challenge in the face of a huge, competitively priced Russian crop and the limited number of destinations where French wheat is preferred.

Less than 5% of the UK crop remains in the field, but the weather has been far from kind so far in September, and we need a week of dry weather to get the rest of the harvest done.

UK crop estimates range between 14.5 and 15 mln t, which leaves a small exportable surplus, and a relatively tight UK market.

There does appear to be enough good milling wheat of sufficient quality to meet demand, although in some areas, especially the central South and the South West, mills will have to adapt intake criteria to accommodate available supplies, if they haven’t done so already.  Milling premiums therefore look capped around current levels and may ease slightly.

In summary, the UK market is range bound and the major influences are currency, where sterling has firmed following the latest meeting of the Bank of England’s Monetary Policy Committee and market perception that UK interest rates may rise soon, and the large surplus across the Channel that needs to find a market.

 OSR market

There was an expectation from many that US soybean output would be revised downwards following the Pro-farmer crop tour, which suggested pod counts and crop potential were not as great as hoped.

This was not reflected in the USDA’s latest numbers. Tuesday’s report showed a further increase in yield forecasts and the CBOT futures market fell sharply as a result.

In Europe, the market has continued to slide. This is due to lower soybean prices and the hangover from the commission’s announcement to amend the import tariffs on Argentine soy-derived biodiesel, which could potentially affect crush demand and therefore prices.

In the UK, the spot squeeze that was helping to prop up UK prices has been solved by the importation of a 33,000t vessel of rapeseed from Romania.  Crush buyers have disappeared from the market, leaving the UK farmer with little spot demand.