Wheat market

US markets continue to consolidate, moving up about $5/t on the week.

Winter wheat sowings are reported as being 24% complete, although moisture levels in key states are lower than a year ago, raising concerns over soil conditions and germination.

The Canadian wheat harvest is now seen winding down, although rain-affected wheat is showing disappointing protein levels.

Conditions remain dry in Australia, with local analysts now pegging the crop closer to 20mln t, rather than the 22.5mln t projected by the USDA.

In Europe, EU wheat exports continue to struggle, running at least 40% behind this time last year. However, recent currency changes have brought French wheat much closer to Russian levels to some destinations.

Russian wheat prices have edged higher, due to increased demand from exporters, although currency strength is seeing farmer retention.

Both the Russian and Ukrainian ministries are projecting a similar winter crop area to last season. Sowings are currently running ahead of last year, at 65% and 35% complete respectively. Recent activity has been aided by much-needed rainfall, although the outlook is for much drier conditions.

UK prices have edged higher, with sterling unchanged on the week. Spot cash premiums remain firm, due to a continued supply squeeze as growers remain reluctant to release grain onto the market.

The UK remains uncompetitive on export quotations, although with various opinions over the final UK crop size, the UK balance sheet could be considerably tighter than some imply.

In summary, Southern Hemisphere production issues, Northern Hemisphere planting issues, and the sizeable US fund short are enough to keep the current positive trend intact.

However, global fundamentals still project ample supplies of coarse grains, wheat included, and this should continue to provide market resistance to any major price rallies.

OSR Market

Bearish overtones from our comments last week have been hard to shrug off, with CBOT soy oil hitting six-week lows yesterday leading soybeans down.

The sell-off in soy oil was led by the US Environmental Protection Agency proposing reductions in biodiesel usage targets for 2018 and 2019: whilst this is a long way off, the market has immediately priced this in.

The US soybean harvest has been progressing and the trade is watching to see whether actual yields meet higher-than-expected estimates. The Canadian canola harvest is also under scrutiny.

Matif rapeseed futures have fallen in the latter part of this week, caused by pressure in the global oilseeds picture and the announcement that European biodiesel producers will launch a counter-complaint against last week’s EU decision to significantly lower the anti-dumping duties on Argentine biodiesel imports.

With plenty of unanswered questions in the market, and politics, currency and weather seemingly counteracting one another, market moves in UK ex-farm rapeseed prices have been sedate. UK crushers are out of the market and UK merchants are looking at the global picture.

Ex-farm prices have dropped £3 on the week, with the trade awaiting USDA’s first stocks report of the season on Friday, and its October world supply and demand report that could confirm the raised USDA soybeans yield. A small decline in prices this week may be a sign of things to come.