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

US markets have eased back over the past week as improving global wheat prospects have prompted bouts of profit-taking on the recent sharp rally.

USDA’s report on Wednesday did little to stir further excitement. US and global wheat numbers were slightly raised and lowered respectively, but all eyes were on the corn numbers, especially in Brazil where drought is seriously affecting prospects for safrinha, the second corn crop.

Although USDA forecasts a 7mln t reduction in Brazilian production, more than many observers expected, the overall corn picture was deemed bearish. Initial 2021/22 global numbers show a prospective record corn crop, although the resulting small increase in global stocks is likely to be offset by increased usage.

USDA also forecasts a record global wheat crop, as expected. But, like corn, higher consumption is predicted to leave stock-to-use ratios at historically low numbers.

USDA’s release prompted some selling and, with wheat crop prospects showing signs of improvement following recent rains, markets may see a dip in the short-term.

However, the Brazilian corn story hasn’t gone away and, with no apparent let-up in the dry weather there, plus the whole of the US growing season to get through, any dips may provide buying opportunities.

Weather will become increasingly important. Not only will 2021 crops have to deliver, but the world will also need record 2022 crops if global stocks are to start a steady rebuild.

The National Agricultural Statistics Service reported US corn and spring wheat sowings at 67% and 70% complete respectively. It rated the winter wheat crop at 49% good/excellent. That is up one point on the week, but still below the 55% reported this time last year.

Russian agricultural consultancy IKAR has lowered its 2021 Russian wheat crop forecast to 79mln t, from 79.5mln t previously.

France’s agriculture ministry puts the country’s 2021 soft wheat area at 4.891mln ha, up 14.8% from last season. Crop condition declined for a fourth consecutive week, but remained well above the level of a year earlier, as crops emerge from a chilly, dry April.

EU wheat prices remain stable over the week, although UK old crop prices have been supported by the news that a Scottish grain merchant has gone into administration, affecting its ability to honour future store tenders.

* For further news on the grain market please go to the ADM Agriculture YouTube channel.

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

US soybeans continue to trade a weather market, but this week attention turned to the May USDA report, which saw soybeans trading at contract highs ahead of the report. 

CBOT soybeans are now valued above $16 for July, whilst oil prices have climbed to new highs.

The report was fairly neutral and didn’t give market the news it was anticipating to rally further. Old crop US stocks were unchanged, yields were marginally below expectations, but ending stocks were slightly higher. South American crop expectations were left unchanged. The market has refocused on weather developments.

The veg oil story remains underpinned with world demand only set to increase. Stocks fell to their lowest level since 2010, with a stocks-to-usage ratio of 10%, while US usage has jumped for use in jet fuel.

Matif rapeseed rallied over €40 recently to trade at new highs ahead of USDA’s release. Markets remain extremely volatile and are likely to continue doing so until the balance sheet is rectified.

UK prices have trade back to highs and sterling is weaker, trading back from Wednesday’s highs to 1.1620 at the time of writing.