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

Despite markets retracing from the recent multi-year high, all major grain exchanges still managed modest gains on the week.

Talk of increased Russian taxes and the potential of further export curbs initially continued to push markets higher, before spill-over pressure from weaker soybean and maize markets pulled wheat off its recent highs.

Russia is set to double its original export tax proposal on wheat to €50/t between 1 March and 30 June. There is talk of potential further curbs on volume and an extension into the new marketing season.

Agri-consultancy IKAR has lowered its forecast for Russian wheat exports in 2020/21 to 37.5mln t, due to the impending tax.

Until the situation is sorted out, export pricing will become a bit of a lottery.

Algeria purchased 390,000t of wheat, including French, German and Argentine origins at the latest tender. The price paid was described as aggressive, reflecting a sizeable discount to replacement levels presumably to ensure physical execution actually happens.

Several further international tenders are expected, although whether the Algerian offer will be repeated remains to be seen.

European wheat prices paused after reaching a 7.5-year high as the trade await further indications on how Russia’s plans will affect global prices.

UK prices end the week on a firmer note, following other markets with currency little changed. Fundamentals also remain much the same, with the country needing to reach a price level that ensures additional imports are secured.

Elsewhere, Ukraine will decide whether to limit maize exports in the 2020/21 season on 25 January. The move was requested by animal feed companies and meat producers to avoid higher food prices.

Ukraine’s year-on-year grain exports have fallen 18% to 27.6mln t according to official figures, and include 12.75mln t of wheat, 10.5mln t of maize, and 3.9mln t of barley.

International Grains Council raised its forecast for 2020/21 global wheat production by 3mln t, citing higher production for Australia, Canada and Russia. However, it slashed the global corn crop by 13mln t due to lower US production.

Strategie Grains raised its forecast of the EU-27 2021 soft wheat crop to 129.7mln t, which would be 10.4mln t higher than this season.

Buenos Aires Grain Exchange reported that the Argentine wheat harvest was complete, with average yields reported 3% lower year on year, with just over 7% of the planted area lost due to unfavourable weather. The crop is estimated at 17mln t.

Argentina’s government has reopened corn exports amid surging registrations as traders believe the country could raise export taxes in the near future.

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

Chicago soybeans continued the sharp sell-off this week , closing lower again for the third session in a row on Wednesday night. Beans were nearly 30 cents down again, but managed to claw back to a 17 cent loss at the end of the session.

There seemed to be more profit taking in Wednesday’s session, with funds again reducing their long.

South American weather remains under a watchful eye. Rains in most growing areas have taken some weather premium out of prices, but the outlook appears dry over the next 10 days.

IHS (formerly Informa) raised Brazil’s soybean production estimates from 132.5mln t to match USDA’s 133mln t. Crop consultancy AgRural estimates 4% of the crop is harvested , compared with 2% last year.

In China Covid-19 cases are on the rise. Renewed lockdowns are now being enforced in Hebei Province. People are reported to be stockpiling food ahead of tighter restrictions.

Veg oil markets were again lower. Malaysian palm eased 3.3% and there has been  a continuation of profit taking and concerns over demand. Exports of Malaysian palm from 1 –20 January were reported down 41% to 1.07mln t. Indian officials are talking of further import taxes, which pressured prices.

Matif rapeseed followed the wider market lower, although it has since traded off the lows of the week.

Sterling is back at the highs of 1.1300, which will pressure UK prices slightly.