Farming News - Weather impacts wheat and oilseed markets

Weather impacts wheat and oilseed markets

04 Nov 2019
Arable / Finance

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

UK prices bucked the global trend this week, following a decline in producer selling and concerns over slow drilling progress.

Both old and new crop values in the UK have risen. May ’20 futures increased by £2.65/t over the past seven days and Nov ’20 futures were up £4.65/t.

The markets are also digesting the consequences of the recently agreed delay to Brexit as far as 31 January and the announcement of a December general election that could have an array of Brexit consequences.

The US market has run out of bullish support. Global grain supplies remain abundant and there is nothing obvious at present to change current sentiment and reverse the downward trend, although global weather may still have its say.

US wheat prices are down $4/t on the week. USDA’s National Agricultural Statistics Service reported US winter wheat sowings as 85% complete, ahead of last season and the five-year average. Initial crop ratings showed a slight improvement on the year at 56% good/excellent.

US wheat exports are running 23% ahead on the year, but remain slightly behind the five year average.

Egypt’s state buyer GASC purchased 235,000t of wheat (60,000t French, 60,000t Romanian and 115,000t Ukrainian) for 5-15 December shipment.

This is only the second time this season that Russian supplies were not included. However, Russian wheat rose further last week, helped by hopes of supplying Saudi Arabia following a recent tender.

EU (Matif) prices are down €2/t on the week, although export demand and inclusion in the Egyptian tender has underpinned cash values.

EU crop monitoring unit MARS trimmed its forecast for the harvest ’19 soft wheat crop yield to 6.01t/ha (6.03t/ha in September), about 1.1% above the five-year average.

However, official data showed soft wheat exports from the EU reached 8.55mln t as of 27 October, 50% up on the same period last year.

Barry Howard, ADM Agriculture’s head of oilseeds, comments on the OSR market

The US soybean harvest is reported at 62% complete compared with an average of 78%. Continued wet snowy weather in the forecast is likely to delay harvest further.

The soybean market has struggled to recover from last week’s sell off. News of a phase 1 deal between China and the US was quickly dismissed with the announcement that the upcoming Asia-Pacific Economic Cooperation meeting has been cancelled.

The Canadian canola harvest in most regions should be nearing completion in the next week with less than 20% left to go. Weather on whole is cold, but dry. Saskatchewan and Alberta harvest is almost done, but Manitoba continues to struggle with wet weather.

Chinese and Canadian officials met this week to discuss China’s ban on Canadian canola seed. The outcome of the meeting was not confirmed, although it was said to be positive.

Harvest in Australia is just starting to gather pace, but is still less than 10% complete. Official reports at the end of this week should confirm early yields and oil results. If found to be lower than last year, this may lead to a sub 2mln t crop.

Matif rapeseed values have recovered from the lows we saw a few weeks ago. With November futures expiring yesterday, February futures managed to regain significant losses in the last few weeks to trade close short-term resistance levels.

Crush margins have come off a few more euros over the last week. Pre-Christmas crush coverage is good, with gaps to fill in 2020. It’s hard to see a major rally in the short term.

Here in the UK, with ongoing political influences, sterling will continue to have a big impact on prices.