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

Global wheat prices have made further gains due to increasing concerns over dryness in Argentina as well as in Russia and Ukraine, helping to support European and UK markets.

Increasing numbers of fields in the north of Argentina will not be harvested as drought increases its grip, while dry conditions in south Russia and Ukraine are having an adverse effect on establishment of winter crops. Night frosts in Ukraine this week could make the problem worse.

Other events are adding to the positive market tone. Ukraine’s 2020 wheat harvest has been reduced to 25.1mln t, over 3mln below last year’s figure, according to official ministry data. Grain exports are running 15% lower on the year, mainly due to lower maize shipments.

Russian wheat export prices rose for the fourth week in a row on strong demand from Turkey, Egypt and other major importers amidst a general lack of farmer selling, despite record ex-farm values in local currency terms.

Talk that Romania may stop wheat exports due to lower yearly supplies has helped to push European/Black Sea prices higher.

Egypt has purchased almost 650,000t of wheat during the week, mainly of Russian origin. Strategic reserves are now put at seven months, above the government’s stipulated minimum six-month target.

Algeria is planning to open its market to imports of Black Sea wheat, which could shake up competition.

Looking at potential downsides, Strategie Grains has raised its EU+UK wheat crop forecast to 129.3mln t, up from 128.mln t last month.

The consultancy kept exports unchanged at 23mln t due to increased shipments from other countries. FranceAgriMer lowered its forecast of French sales outside the EU to 6.6mln t, down from an initial projection of 7.75mln t.

However, European and UK markets rose this week, gaining from the global trend and limited ex-farm business. UK values touched contract highs, aided by a weaker pound, the much-reduced harvest and increased import requirements.

The Bank of England has warned that the Covid resurgence and lack of clarity over the UK’s future trading relationship with the EU could continue to pressure sterling.

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

China has been in the market every day this week purchasing US soybeans to try to bolster stocks.

Buying interest appears to be unaffected by rising tensions following a statement by President Trump that China must be held accountable for the Covid-19 outbreak.

The market has rallied for several weeks on rising demand and soybean prices reached levels not seen since 2018. The market looked over-bought, with managed funds still record long. However, outside markets weakened on Covid-19 fears and markets saw this as an opportunity for a sell off.

Weather in the US remains favourable, which will help harvest progress. US crop ratings remain unchanged at 63% good/excellent.

The US soybean harvest was estimated to be 6% complete at the start of the week. Early yields have been reported as better than expected in some states.

Crude oil is still trading below $40. Veg oil had made gains at the start of the week, reaching eight-month highs. However, the increase couldn’t be sustained, pressured by weaker outside markets and developing restrictions in Europe due to coronavirus.

In Canada, the national rapeseed harvest is estimated to be 35% complete, as of 15 September. Yields are in line with the three-year average.

In Australia, crops in the south are reported to be in good condition after 10-20mm of rain in the past week. But soil moistures are falling in Western Australia, which may affect yield potential.

Matif rapeseed rose to new highs to €395 on the November position, helped by firmer oil markets at the start of the week, along with continued concerns over the lack of rain in northern Europe, Baltics and Ukraine.

However, forecast of rain, weaker outside markets and falling agricultural commodity and oil prices saw Matif values fall back close to nearby support levels.

UK prices fell from season highs, but a combination of Brexit and coronavirus developments will make sterling volatile in the short-term.