Farming News - Wheat & OSR market update from ADM

Wheat & OSR market update from ADM

12 Mar 2021
Frontdesk / Arable / Finance

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

The market was looking for guidance in this week’s USDA report, but an unchanged outlook for US wheat and lack of market assistance from corn or soybeans saw wheat prices drift lower, down $4-5/t over the week.

USDA trimmed global wheat stocks by 3mln t compared with last month’s forecast, although this was mainly driven by a 4.5mln t fall in Chinese stocks due to higher domestic wheat feeding. China has more than a years’ worth of supply in storage.

The market focus is now on the US planting report due out at the end of the month. Until then weather will be the driver and, with a more favourable outlook for the US winter wheat region, some expect prices to drift lower.

Soft wheat exports from the EU had reached 18.23mln t as of 7 March, down from 22.51mln t cleared by the same week last season. However, against the backdrop of last year’s smaller harvest and rising internal demand mainly due to lower maize imports, EU wheat prices are expected to remain firm.

France’s farm ministry maintained its forecast of French wheat exports to countries outside the EU at 7.45mln t, while increasing its forecast of 2020/21 ending stocks to 2.7mln t, compared with 2.5mln t a month ago.

UK prices are mixed on the week, with old crop marginally lower and new crop marginally higher, as a stronger pound /euro exchange limits upside in prices.

Market activity remains sluggish, although market dynamics still project the need for the UK to import a considerable volume over the remainder of the season, against the backdrop of declining EU supplies.

The Food and Agriculture Organisation said that worldwide cereal harvests remain on course to set a record in 2020, adding that early indications pointed to a further increase in production during 2021.

Egypt’s strategic wheat reserves are sufficient to cover four months of consumption, the country’s supply ministry said.

A mild Russian winter has dramatically improved the condition of winter grain sowings, which had been hit by the dry autumn, signalling brighter prospects for the country’s 2021 crop.

France’s farm ministry estimates that 88% of its wheat crop was in good/excellent condition, up one point on the week.

Argentine wheat sowings are likely to fall this year as farmers calculate the risk of state intervention in the market, while new Chinese demand for barley is expected to induce some growers to switch crops.

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

Another volatile week with soybeans touching contract highs earlier on. The focus was on the release of the March USDA report and, whilst this was not expected to contain big changes, it did highlight the tightness of the supply and demand balance sheet.

US soybean ending stocks were unchanged at 120mln bushels (about 3.27mln t) , but world ending stocks were increased from 83.4mln t to 83.7mln t (average estimate 82.7mln t).

USDA increased Brazilian soybean production to 134mln t from last month’s 133.2mln t, but reduced the Argentinian soybean crop to 47.5mln t from 48mln t.

With the USDA report out of the way, the focus is back on South American weather developments, which remain supportive. Rain is still causing delays in the northern and central parts of Brazil. Mato Grosso declared a state of emergency with 3mln ha of crop being hit by severe flooding.

South Brazil into Argentina remains dry. Rosario grains exchange reported 20% of the soybean crop in the central parts of Argentina looking very poor. Buenos Aires Grain Exchange reduced crop condition down to just 10% good/excellent compared with 44% last year.

Veg oil hit highs again, briefly following mineral oil up but also led by firmer soy oil. Malaysian palm futures played catch up after closing lower on Friday, touching a 10-year high. Chinese veg oil futures also traded higher at the start of the week before slipping post USDA.  

Canadian canola futures rallied with the Matif, but closed shy of the $800 mark on the May, which seemed to be a target for funds to take some profits.

Matif rapeseed futures closed higher for the tenth session in a row, to touch a record high before retracing after the USDA report.

UK prices remain just shy of contract highs, despite firmer sterling.