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

Global markets this week remain driven by the effect of poor weather on US spring crop production.

Confirmation of a larger-than-expected crop in Canada did little to calm the market, even though this was backed by bigger crop forecasts for Russia and Australia. Global supplies appear more than adequate, especially with demand remaining uncertain.

In more detail, US corn and soybean crop ratings declined further last week. A cold front set to enter the western corn belt could also cause some frost damage.

Canadian 2020/21 all-wheat production is expected to increase by 10% compared with last year, to 35.7mln t, mainly due to increased winter and durum wheat output.

The IGC raised its forecast for global 2020/21 wheat production to a record high of 763mln t, with increases for Russia and Australia largely responsible for the increase.

US wheat prices took their lead from the spring crop ratings, increasing a further $7/t on the week, aided by support from other markets and talk of Chinese buying interest.

Russian wheat export prices have firmed. Exporters are looking to secure supplies to cover a heavy early-season export programme, but farmers remain reluctant sellers.

Ukraine’s agriculture ministry has reduced its forecast for the country’s 2020 grain crop to 68mln t from 70mln t previously, mainly due to a reduction in its maize crop forecast.

The ministry also expects Ukraine’s grain exports to fall 16% on the year to 47.4mln t, due to a smaller crop, including 17.5mln t of wheat, 26mln t of maize, and 3.3mln t of barley.

EU (Paris) futures followed the US trend, up €4/t on the week, with gains capped by a firmer euro/dollar exchange rate. UK (London) futures also increased, rising £2.50/t.

UK physical prices remain driven by harvest delays in the north and west, where ex-farm and delivered prices continue to firm.

With the forecast expected to improve into next week, additional supplies may enter the pipeline and reduce spot premiums. Feed wheat imports are also arriving, satisfying nearby demand.

Looking further ahead and further afield, Argentina’s wheat yields could fall as much as 50% on the year in northern/central parts of the country’s farm belt, due to dryness exacerbated by unusually strong frosts.

US winter wheat sowings have commenced in the far south, although soil conditions remain dry and additional rains are required.

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

US weather forecasts are mixed, with rain due this week and over the weekend, but it could miss some of the key areas. Temperatures are falling below normal.

Reuters reported further Chinese purchases of US soybeans in yesterday’s session by state-owned firms, totalling 480,000t Dec-Jan, supporting nearby soybean prices.

Statistics Canada estimates the country’s canola production at 19.4mln t vs. 19.5mln t earlier this year, against trade expectations of 19.2–21mln t.

EU weather remains largely dry with some rain expected across the north-east and temperatures close to normal. In the Baltics/Black Sea, temperatures are above normal with little rain in the forecast for the next few weeks, which may affect germination of new-crop rapeseed.

Matif rapeseed has firmed but struggled to break the nearby resistance level of €385. Veg oil prices remain firm and plantings are now largely complete, but concerns remain over how dry areas are across Europe and Black Sea regions.

In the UK, sterling rallied to a 12-week high against the euro ahead of next week’s ECB policy meeting.