Farming News - Weekly round up of the Wheat & OSR markets
Weekly round up of the Wheat & OSR markets
Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market
Weather issues are still firmly in the driving seat, making for a quiet week on global markets.
USDA’s report at the end of last week provided few surprises for wheat, continuing to confirm abundant global stocks.
The effect of weather on new crop prospects remains the key concern, with dryness in the US and Russia the main focal points.
In addition, the potential for government intervention in Russia and perhaps Ukraine could tighten exports over the second half of the season and underpin prices. Conversely, the arrival of Australian wheat will provide resistance to upward movement.
US wheat prices have fallen about $4/t on the week as the preceding rally encouraged some long-holders to bank the profit.
USDA reported supportive corn and bean numbers and an expected drop in US stocks, but increased global ending stocks mainly on an upward revision of the Russian wheat crop.
Weather remains dry in the US southern plains where moisture levels are depleting rapidly. It’s the same in parts of southern Russia and Argentina. Most parts of the Ukraine have had rainfall over the past week.
SovEcon reports that current dry weather may reduce winter wheat sowings in Russia by 10-15%, mainly in the central part of the country.
More immediately, Russia is expected to export around 50mln t of grain in the current marketing season, up from a previous estimate of 45mln t, although trade still awaits further news on expected export quota for January-June 2021.
The country had exported 11.6mln t of wheat as of the end of September, down 3% on the year.
Ukraine’s grain traders union (UGA) has lowered its forecast for this year’s grain crop due to poor weather and an expected fall in maize output. It puts the wheat crop at 25.3mln t.
Ukraine’s grain exports have fallen 14% on the year to 13.1mln t, due to lower exports of maize. Wheat exports are seen at 9.2mln t, down from 9.77mln t.
France’s agriculture ministry has cut it estimates of the country’s 2020 maize crop to 13.5mln t, compared with 14.1mln t last month. The wheat crop has been trimmed from 29.5mln t to 29.2mln t.
In the UK, the market has remained virtually unchanged over the past week. Signs of sellers looking to place wheat had pressured delivery premiums in the spot position, but these seem to have dried up, with premiums edging back higher.
Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market
Outside markets continue to be volatile given recent Covid-19 developments, economic stimulus bills and the upcoming US election.
US weather shows some showers in the five-day forecast, with temperatures falling below normal in some regions, but dry where harvest is still progressing. There is more rain in the six to 10-day forecast, mostly in Mississippi.
Soybean prices saw a setback on Monday with a lack of news coming out of the US due to USDA being off for Columbus Day. Funds saw this as an opportunity for profit taking.
USDA has since reported the US soybean harvest at 61% complete compared with 38% last week (23% last year and 42% five-year average). Crop conditions fell from 64% good/excellent to 63%, with some crop concerns developing in Illinois.
Parts of Brazil have now seen rain but the amount is below expectations. Planting progress remains a concern, put at 3% nationally compared with 11% last year.
In Argentina, farmer selling is slow as farmers hold on to soybeans as a hedge against inflation. This may cause a domestic supply issue.
China remains a keen buyer. USDA announced a further sale of 264,000t of beans on Wednesday.
Given the bullish USDA report last Friday, managed funds continue to increase their net long in soybeans to 244,000 contracts.
Matif rapeseed firmed at the end of the week, but followed US markets lower on Monday. Prices have struggled to get back to highs, despite lower plantings in Ukraine and France’s agricultural ministry reducing its country’s 2020 harvest estimate to 3.3mln t (32% below the five-year average).
UK prices weren’t helped by a firmer pound, which rallied due to an EU trade deal looking more likely, although this is still far from certain.