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

Wheat markets continue to firm amid strong international trade, tightening global production, declining export availability and a bullish US wheat stock/production report.

On Thursday USDA estimated all-wheat stocks in the US at 1.78 bln bushels as of 1 September. The figure was  8% lower than a year ago and below trade expectations, mainly due to higher domestic usage and a lower crop forecast.

A severe drought, following a season of record grain exports, is forecast to shrink Canada’s stock of principal grain to its lowest ever level of 7.8mln t at the end of 2021/22.

Buenos Aires Grain Exchange has kept Argentina’s wheat area and production unchanged on the week amid reports that recent drier weather is starting to stress crops.

Brazil’s government has scrapped the tax rate on corn imports until 31 December in a bid to increase corn imports.

Ukraine’s farmers had sown 1.95mln ha of winter wheat as of 27 September, or 29% of the planned 6.68mln ha, according to the country’s agriculture ministry. Last autumn just 6.1 mln ha of winter wheat was sown due to drought. 

However, Russia risks a drop in winter crop sowings due to adverse weather and tax worries, with farmers reported to have sown 10.5mln ha to date, down 12% on the year.

China is snapping up cargoes of Australian wheat, despite a bitter stand-off in other trades, as global crop downgrades leads to concerns over a shortfall in output.

EU soft wheat exports had reached 6.95mln t as of  26 September, up 37% on the year despite a reporting delay in French exports.

Matif futures (Dec 21) posted fresh contract highs on Tuesday to Thursday and were trading up again today (Friday) at €264 in late morning trade.

France’s port line-up is adding in more vessels destined for China following that country’s decision to reduce import specification for French wheat from 77kg/hl to 75kg/hl.

Continued demand from key importers like North Africa, Iraq, Iran and Turkey looks set to keep EU values supported.

UK markets remain competitive for export and recent trades have been concluded, helped by a weaker pound. ICE Nov 21 futures topped £200/t yesterday and have traded up a further £2 today.

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

US weather is now showing some rain heading south, whilst the northern plains are looking dry with temperatures around normal.

US harvest is estimated at 16% complete compared with 6% last week, and 18% last year. Yields are said to be improving.

USDA’s report published yesterday showed higher-than-expected stocks of old-crop soybeans for the US as of 1 September. Its figure of 256 mln bushels compared with a trade estimate of 174 mln bushels. Soybean crop output for 2020 was increased to 4,216 mln bushels compared with 4,136 mln bushels in the last report.

In South American, planting continues in Brazil with beneficial rain in the forecast for this week into next, with normal temperatures and scattered showers. In Argentina, the government renewed exports of beef into China after the 50% restriction.

In China, Golden Week holidays start next week. The only US soybean exports announced ahead of this were 330,000t earlier in the week. US exports remain 36% below last year. There are still rumours that some crushers may stop production due to higher energy costs.

Crude oil prices remain firm. EU energy prices continue to rise with natural gas prices leading the charge. Veg oils have in turn rallied, with palm reaching a record high in yesterday’s session, trading 2.5% up on the back of tight veg oil supplies and increased demand. Soy-oil rallied on increased demand for 2022.

Canadian rapeseed prices seem to be stuck in a trading range of $850-$900/t. Harvest continued over the weekend, which brought with it some farmer selling on Monday, but should be complete next week.

Matif rapeseed traded at contract highs again this week. Whilst prices are now looking overbought, November futures have rallied €63 in just over 2 weeks.

Sterling fell sharply in yesterday’s session due to major concerns among investors over the UK economy as we head into winter, sparked by the recent lack of fuel supply. However, fuel supplies now appear to be recovering.