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

Grain markets around the world have continued to trade higher as the weather-related rally intensifies speculative buying, driving markets to new contract highs.

Continued dryness in Brazil is threatening the country’s second corn crop, with the potential impact of increasing export demand for US corn, which is something the US can ill afford at a time when its weather remains far from ideal.

These weather issues in the US are already being highlighted in winter wheat crops, where drought-like conditions remain an issue across the Southern and Northern Plains. We have seen the weekly USDA crop rating fall sharply week on week.

In Europe, the cooler and drier weather continues to affect crop development and is delaying spring sowings. In contrast, areas in Russia have received too much rain. Analyst IKAR has downgraded its forecast for Russia’s 2021 wheat crop to 79.5mln t from 81mln t, as farmers will need to re-sow wheat across a large area of the country’s central region.

The upward market march has seen UK new-crop futures put on £10 over the past week, and the scale of the global rally has been impressive. However, markets will be vulnerable to bouts of profit-taking and will take a breather at some point. We are, and will probably remain, in a weather market for some time, with any forecast of rain in the US and EU growing areas seen as negative to pricing and less-than-expected or no rain seen as positive.

We may not yet have seen the top of the new-crop market, although prices are at historically high levels for the time of year.  A little and often marketing strategy remains a sensible option for UK growers.

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

It was another week for the bulls on the CBOT, but that doesn’t mean it wasn’t a rollercoaster. July soybeans spent the first half of the week heading to new highs before a little pull back, although they have since resumed an upward trend. Oils have had a very strong week, hitting seven straight day on day highs.

China continues to be unpredictable. Last week its agriculture ministry released guidelines on how to reduce corn and soymeal intake within the hog population. However, crush rates and margins continue to improve, which continues to disprove the rumours of increasing African swine fever.

The weather in the US remains very hard to forecast. The most recent reports have added rain to the Midwest, Delta, South East and the lake states, but the Plains and Dakotas still look to be warm and dry. Canada’s forecast is still not looking good. It remains dry and cold with soil moisture levels decreasing each day.

US bean plantings are at 8% compared with 7% last year. Good weather is becoming even more important to maintain the pipeline stocks. Corn is 17% planted compared with the 20% five-year average. Corn emergence is also on par with previous years. According to ADM’s CEO Juan Luciano, we could expect corn and soybeans to gain an extra 5mln acres in the US from the March estimates. This would add 125mln bushels to each crop.

Canadian canola touched $900 on Monday with fresh news of two new crush facilities. The Canadian agriculture ministry estimated the country’s crop to be 21.5mln acres, well below the trade estimate of 22.6mln acres.

Matif rapeseed sharply fell on Tuesday to recent lows after profit taking/technical correction. From there it has slowly recovered but remains very volatile. May Matif expires tomorrow and currently trades at record high levels. August  Matif lags behind, but is trading approximately €10 off recent highs.

Sterling has struggled to find support this week. Fears of a pro-Scottish independence manifesto has not helped. As the UK continues to roll out its vaccine, but also buy in booster jabs for the autumn, the underlying tone is good in the long run, although the gains are going to be slow to come by.

*For more information on the oilseeds market with Will Ringrose go to www.youtube.com/watch?v=iYFn4ihDuU4