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

Since our last report two weeks ago the US market has traded down $22/t, as reports of sluggish US exports, improving new crop prospects in some areas and talk of Ukrainian export corridors being set up weigh on prices.

EU prices have followed the weaker global trend, with new crop MATIF (Dec) and London (Nov) futures falling €21/t and £16/t respectively over the period.

Australia is forecast to produce another huge harvest this year, with wheat production estimated at the country’s fourth highest level of 30.3 mln t, albeit well below last year’s record 36.3 mln t.

Russia’s new crop wheat harvest continues to be talked higher, with current estimates at 85-87 mln t, which would place export potential at around 40 mln t.

Ukraine’s Grain Association has raised its forecast for this year’s wheat harvest to 19.2 mln t and corn to 26.1 mln t, placing export potential at 10 mln t and 15 mln t respectively.

Ukraine’s president said there could be as much as 75 mln t of grain stuck in the country by this autumn, with the agriculture ministry stating that failure to open up export corridors would lead to ‘catastrophic’ global price increases.

Kazakhstan is expected to harvest between 13.0-13.5 mln t of wheat this year, up 15%. However, the government plans to extend grain and flour export quotas from 15 June to  1 September.

Meanwhile, US farmers with land in the final year of their CPR (conservation reserve program) contract can end their agreements early in a bid to boost crop production from autumn onwards. USDA says 3.4 mln acres are due to expire.

Elsewhere, crop prospects appear less rosy. The US attaché in India has cut its estimate of the country’s wheat crop by about 11mln t to 99 mln t, due to intense heat.

India has allowed wheat shipments of 469,000t since banning most exports last month, but at least 1.7 mln t is still lying in export facilities and may be at risk from looming monsoon rains.

Buenos Aires Grain Exchange has trimmed its estimate of Argentina’s 2022/23 wheat area to 6.5 mln ha, down from 6.6 mln ha, due to dry weather and rapidly depleting soil moisture.

France’s wheat crop has continued to deteriorate due to heat, with crop ratings (good or very good condition) slipping to 67% in the week ending 30 May.

Following this, severe storms moved across France last weekend. Although too early to for any real damage assessment, the French Farmers’ Union said it was significant and talked of 100% losses for some farms.

In addition, France’s farm ministry has cut its estimates of the country’s 2022 soft wheat area to 4.76 mln ha, down from 4.8 mln ha last month.

Crop sowing remains well behind in Canada due to adverse weather conditions, causing farmers to revaluate acreage plans.

Egypt’s trade ministry has raised the maximum moisture content on wheat imports to 14%, which will open up other origins for international tenders.

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

Energy markets have made new recent highs, with West Texas Intermediate crude closing over $121 a barrel.

The US is still experiencing showers, but normal temperatures are expected going into this weekend before the weather turns hotter and dry towards the end of June. The break in rain for some areas will allow those behind on planting to catch up. The US is reported to be 78% planted now versus 66% last week (89% last year).

Soybeans continue to rally, hitting new highs on old and new crop during Wednesday’s session, but couldn’t hold over $17.50/bushel. Apparent nearby demand will give some underlying support in the short term.

In South America, exports out of Brazil are slow, with 7.6 mln t left in the line-up. Brazil’s National Supply Company (CONAB) increased the country’s soybean crop estimate to 124.3 mln t as a result of higher yields and a slightly higher area. That still trails USDA’s 125 mln t.

Harvest in Argentina is nearly complete. Buenos Aires Grain Exchange reports progress at 94%. BAGE also increased its crop forecast to 43.3 mln t (+1.3 mln t). There have been rumours of government introducing a tax on profits resulting from the Russia/Ukraine war, but it has to pass congress first.

In China, Covid-19 lockdowns are now being relaxed in some areas, which should help the re-opening of businesses. It was reported last week that China cancelled 72,000t of US soybeans.

Heavy rains have set in across most of the large rapeseed growing regions of China, which will delay harvest, and crop production estimates are being reduced from 6 mln t to closer to 5 mln t.

After several sessions of veg oil prices trying to keep up with crude oil, news that Indonesia will increase palm exports through to the end of July pressured prices on Thursday, with Malaysian palm trading 5% down during the morning.

MATIF rapeseed appears rangebound for the past week, struggling to break back up to the highs seen a few weeks ago. EU and UK rapeseed prices have fallen sharply from those highs.