WHEAT

US prices have continued their consolidation after last week’s government reports, although wheat futures started to slide off the highs seen earlier this week.

US sales remain routine, with shipments still lagging last year by 27% against the perceived 14% yearly increase currently projected by USDA.

A return to drier conditions in the US Southern Plains should allow growers to resume winter wheat plantings after recent rains stalled activity.

EU markets closed at a two-week low last night as export demand remains slow and the vessel line-up thin, with only two French vessels loading for Algeria.

Soft wheat exports to non-EU destinations, reported at 4.8mln t year-to-date, still show a 23% yearly decline. No substantial increase is expected in the near term, as Russian wheat clearly remains the cheapest wheat on the global market.

Russia’s agriculture ministry has confirmed its 35 mln t forecast for 2018/19 grain exports, while Ukrainian grain exports were reported at 11.1mln t, down from 13mln t at the same time last year.

Concerns over dryness and associated crop establishment problems across much of mainland Europe are increasing, with moisture mainly confined to the Iberian Peninsula.

UK prices have this week been mainly influenced by currency, as earlier prospects of a potential Brexit deal were then dampened by continued disagreement over the Irish border.

Marketwise, end-users remain relaxed over extending coverage at current levels, as growers continue to concentrate on sowing and general fieldwork, rather than grain marketing.

However, growers should bear in mind that the domestic balance sheet is steadily becoming heavier. Over 500,000t of wheat was imported during the first two months of the marketing season, but only 50,000t was exported.

David Sheppard Gleadell's Managing Director commented:

"The recent surge in global prices seems to have run out of steam for now. US exports still show few signs of increased demand, leaving longs to liquidate their recent buying spree.

"The price action may suggest that last week’s drop in world production was not enough to spike US prices higher, although foreign global export projections remain optimistic".

OSR 

Rapeseed prices have ticked higher across Europe as the dry weather starts to affect logistics as well as planted crops.

Water levels in the inland river and canal system used to transport rapeseed and processed products have dropped markedly, preventing free movement of goods when demand for rapeseed oil from the biodiesel industry is starting to pick up.

Ongoing weather problems in Australia and Canada are only adding to the well-publicised supply problems in Europe.

Farmer selling is very limited, as land work and concerns about the poor autumn drillings have all but dried up any first-hand selling.

However, whilst the rapeseed outlook is a friendly one, we must remember that the product is only a small part of the global oilseeds market.

The soy market is the key to market direction, and with the US carryout likely to exceed 27mln t, it is difficult to see a major upward move in rapeseed without a change in trade policy between the US and China.