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

Markets have firmed over the past week as weather concerns continue to threaten global corn and wheat production.

Ongoing dryness in the US northern plains, Canadian prairies and parts of the Black Sea region is continuing to threaten spring crops, while rain in the EU and western parts of the Black Sea region is raising concerns over final quality.

With further downward production estimates expected for Brazil’s corn crop, and the slow pace of the Argentine harvest, extra demand is could come back into the US, placing greater emphasis on new crop weather.

Early reports from Russia show yields are lower than expected, leading analysts to begin trimming back production numbers.

EU harvests have started around 10-14 days later than normal. This has delayed shipment of new crop supplies into the UK, causing spot premiums to firm as domestic supplies tighten.

UK new crop is now all about weather, how crops yield and overall quality. Increased domestic demand should provide price support, but talk of a larger percentage of the EU crop potentially only being of feed quality could pressure the UK market.

In more detail, USDA projected a lower-than-expected US wheat crop in this week’s report as a sharp fall in spring/durum production more than negated a slight rise in winter wheat. The carry-out for 2021/22 is seen at a 13-year low.

Brazil’s National Supply Company (CONAB) reduced its estimate of the country’s 2020/21 corn crop to 93.4mln t, as drought and frosts continue to threaten.

Buenos Aires Grain Exchange reported Argentine wheat sowings as 91% complete as of 8 July, with an expected area of 6.5mln ha seen producing a 19mln t wheat crop.

Ukraine’s 2021 wheat crop is now put at 29.5mln t as recent precipitation has helped the crop, although excess rains in some areas could herald a larger proportion of feed quality wheat.

Russian farmers have harvested 2.5mln ha of wheat as of July 13, with average yields pegged at 3.28t/ha, down from 3.36t/ha this time last year.

The amount of France’s soft wheat crop reported as in good or very good condition held at 79% in the week ending 5 July. The country’s soft wheat crop is expected to rise 27% on the year to 37.1mln t.

Grain harvests have started in Germany, but have been stalled repeatedly by heavy rainfall. Harvest output has been trimmed to 44.2mln t, included 22.8mln t of wheat.

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

Another week of big moves for agricultural commodities. The Canadian weather situation is now the key driver, with crop conditions worsening by the day with little to no rain hitting the main growing regions. 

Temperatures are still soaring and lack of soil moisture is a big concern. There is now talk that the Canada could lose up to 5mln t of its canola crop if rain does not arrive soon.

Prices traded limit up on several sessions, despite trading limits on the exchange being extended. Price spreads are now trading at all-time highs against soybeans and there is a big premium against Matif rapeseed. 

Soybean values remain firm, although the US weather is less of a concern than it was, with rain moving into South Dakota and the Western corn belt this week. Crop conditions were unchanged week on week at 59% good/excellent compared with 72% last year.

Matif rapeseed followed canola prices higher, touching new contract highs this week. Europe’s harvest is still delayed, although it is expected to gather momentum this week. Weather forecasts suggest a break in showers which will help.

UK rapeseed prices returned close to highs. Sterling has firmed to 1.1700, breaking its recent range, but the move in the Matif has outweighed the loss the currency move would have caused.

This week saw the release of USDA’s global supply and demand report, which failed to excite the bulls into another significant rally. CBOT soybeans were already firmer on the back of higher oil markets. 

Chinese imports for 2021/22 were lowered by 1mln t from 103mln t to 102mln t. USDA kept the Brazilian soybean crop unchanged at 137mln t, compared with trade estimates at 136.3mln t.

There were reports of Chinese purchases from Brazil for September shipment, but these remain unconfirmed.

Oil markets were mixed. Crude oil traded high briefly, before falling $3 in the last few sessions. Malaysian palm oil closed lower at the start of the week with stocks reported at a nine-month high, but prices are firmer, following soy-oil prices.