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

The market has pushed lower this week as forecasts for rain in the US northern plains and other regions outweighed any current long-term fundamental support for corn and wheat.

Talk of lower Chinese demand for corn has added to the pressure.

While these factors have ended the substantial recent global wheat rally that was driven by dry weather which hit Brazil’s corn output, the long-term outlook for grains remains underpinned.

There is still talk of further reductions in Brazil’s corn crop. Indeed, first shipments of Argentine corn have begun to arrive in the country, as record high prices and high demand have made end-users turn to imports.

And, in the longer term, China will remain a major importer of both wheat and corn.  

Back to the present, and US crop ratings for winter and spring wheat, as well as corn, all slipped on the week as dryness intensified across much of the northern corn belt. This makes the forecast rain all the more welcome.

In Europe it a different picture. Russia now puts its total 2021 grain crop at 127mln t, including over 81mln t of wheat, about 1mln t above the recent IKAR estimate due to improved weather. USDA puts it as high as 86 mln t, around last year’s level.

France’s agriculture ministry reported 81% of the country’s soft wheat crop was in good/excellent condition as of 7 June, up one point on the week and well above the 56% seen in the corresponding week last year.

German farm co-operative DRV expects the country to produce 23mln t of wheat this season, slightly above last year. However, the next two to three weeks are crucial for plant development as crops have not yet reached the grain-filling stage.

UK crop conditions continue to improve. Growers are putting more confidence in improved forecasted yields and are potentially looking to market more at are current values, which historically remain better than average.

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

CBOT soybeans have traded sharply down on the week so far, as improving weather conditions and forecasts in the US continue to pressure the market.

Talk that President Biden may adjust the biofuel mandate weighed on soy oil, which is now trading back below the 40-day moving average. This could suggest that we are moving into a downtrend.

Malaysian palm oil continues to trade at the lower levels, seeing the lowest close since 24 May on Wednesday this week. All this has put further pressure on soybeans.

US soybean plantings are now reported to be 94% complete compared with 90% last week. USDA has dropped the crop ratings from 67% good to excellent to 62%.

Matif has followed the downward trend. August 21 has shown a sharp reduction, trading at €490.50 compared to last Thursday’s €534.50.

UK rapeseed crops continue to look well, but ex-farm sales remain limited. The crush continues to buy imports, with rapeseed still coming to the market in the German Baltic region.

Old crop is reaching the end of the season, but occasional loads are still being placed. Growers should consider offloading remaining parcels – with a near £90/t inverse there is no reason to carry any seed into the new season.