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

Corn remains the driver for the global wheat market and the past week has been dominated by weather concerns, mainly in Brazil where continued dryness is affecting the country’s second corn crop.

Crop estimates are rapidly declining and, with no rain expected for Brazil over the coming weeks, the impact of the smaller crop is seen pushing export demand back to US corn.

This would severely tighten the US balance sheet, especially with continued export demand seen from China, supporting higher corn prices and dragging global wheat values upwards.

Although wheat crops in parts of the southern and northern plains of the US have received rains, the forecast of drier conditions has added support, along with the extremely dry and cooler conditions in Canada.

US wheat prices are completely uncompetitive on the export market, but at present it’s all about corn and Brazil. EU (Baltic) and Black Sea prices remain the cheapest wheat in the world, and at between $35-$50/t discount to US wheat there is little reason for them to go lower.

EU and UK old prices have remained steady, with UK new crop down £2 on the week, despite the Chicago-based rally. Recent rain for crops have been welcomed, although more is needed, along with some sunshine and warmth to enhance yield potential.

New crop prices remain attractive for growers, in the £180-190/t price range ex-farm for early in the new crop marketing season, but that does not mean markets cannot retest the recent highs.

*For more information on the grain market with Jonathan Lane please go to www.youtube.com/watch?v=RLn043z4bE8

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

Fundamentally, the market is still looking bullish due to continuing global weather issues and strong consumer demand.

Brazil has expanded its near-zero rainfall area, which almost guarantees that further downgrades can be expected for the country’s corn crop. The US weather forecast continues to show rain for the East Midwest, Delta and south east into mid-May, but the Plains, West Midwest and Dakotas are expected to remain dry for the foreseeable future, which will continue to draw on soil moisture levels, despite the temperature being well below normal.

Soybean planting is carrying on at a rate of knots in the US, with 24% of the planned area planted compared with the five-year average of 11%. Topsoil moisture is 63% adequate/surplus compared with 80%, the year-on-year average. Next week’s USDA report may even add some soybean acres to the previous estimate.

Despite this, weather continues to dominate market sentiment. Chicago soybeans started the week off strongly and made big gains on Thursday morning, with $16/bushel on the cards.

Asian markets have been quiet this week, with China being on holiday. However, they opened sharply higher on Thursday and nearby Malaysian palm oil hit a record high. Demand remains strong, but May is a short production month and manpower for harvesting remains a challenge. Global usage of veg-oils in the energy market is only set to continue, with various countries now targeting a reduction in fossil fuel consumption.

Matif has hit three straight-day highs this week, with Aug 21 values opening Thursday more than €23 up on last Fridays’ close, at €527.75, and continuing to make further strong gains.

In Canada, the market was only $40 off $1,000. It is still mainly a weather story, but with Canada still cold and dry, there is a chance these could head even higher.

Sterling has had some small gains this week. However, Thursday’s election results will be critical for what happens to sterling going forward. UK new crop prices are as high as many can remember, approaching £460/t delivered to crush for the first time this season – for good reasons.