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

Markets tumbled over the past week due to concerns over the spread of the Omicron covid variant and its effect on demand for commodities. However, the risk-off sentiment has since abated and prices have recovered somewhat.

UK prices have reduced by the best part of £17/t over the same period as a result of the weaker global markets. Short-term price movement will continue to be driven by concerns over the new covid variant and its potential impact upon equity, financial and commodity markets.

However, the wheat supply and demand situation, especially for milling wheat, remains bullish, not least because exports for some key origins generally remain unsustainably high and will have to reduce at some point.

Russian wheat shipments for 2021/22 amounted to 18mln t as of 25 November. Although down 17% on the year, exports face further restrictions in the new year as the country looks to preserve domestic stocks.

Ukraine has exported 24.8mln t of grain so far this season, up 18% on the year including 14.3mln t of wheat.

Meanwhile, Egypt’s state grain buyer GASC purchased 600,000t of wheat (40% Russian, 40% Romanian and 20% Ukrainian) for 9-20 January shipment in its latest international tender.

The EU Commission increased its forecast of EU wheat exports to 32mln t from 30mln t previously. As of 28 November shipments had reached 11.6mln t, up 11% on the year, and may exceed this once French data is accounted for.

There has been improvement in some southern hemisphere crops. Australia’s ABARES raised its forecast for the country’s current wheat crop to a record 34.4mln t, but added that heavy rains would probably lead to a fall in grain quality.

Buenos Aires Grain Exchange reported that Argentina’s 2021/22 wheat crop is expected to reach a record 20.3mln t, quoting reports of ‘better-than-expected yields’ during early harvest.

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

Another volatile week for all markets. US trading resumed after Thanksgiving and slipped sharply lower following initial reports of the new Omicron covid strain in South Africa. This also fell in line with month end and the trade took the opportunity to make some profit.

CBOT soybeans began the week by trading lower. Early South American crop availability, lack of Chinese buying and demand fears over the virus weighed on prices.

In South America, weather forecasts indicate rain disappearing at the end of the week and things looking warm and dry into the second half of December. Argentina’s soybean crop planting is on track with almost 40% now completed.

There were rumours of China buying small soybean parcels out of the US, as well as three cargoes from Brazil yesterday.

Oil markets traded sharply lower in reaction to the new Omicron variant. Crude oil fell €10 to $68 per barrel (WTI), a level not seen since September, amid concerns over the potential rolling out of new lockdowns and travel restrictions.

Canadian canola prices dropped back from the record highs. Stats Can will release its crop estimates on Friday; Reuters puts the crop at 12.8mln t, slightly up on its previous forecast of 12.78mln t.

In Australia heavy rain still hampers the wheat harvest, but ABARES estimates the canola crop at 5.73mln t compared with 4.52mln t last year.

Matif rapeseed traded sharply off the highs to levels not seen since October. The market has since taken back some of those losses, but sellers remain side-lined for now.