Farming News - Wheat & OSR market update from ADM

Wheat & OSR market update from ADM

21 Jan 2022
Frontdesk / Arable / Finance

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

The US market has traded up $15/t week on week after earlier weakness as increased tension between the Ukraine and Russia prompted a risk-off short-covering rally.

European prices have followed the US market higher, although EU wheat still remains cheap against Russian wheat so is expected to attract export demand.

Russian domestic prices now exceed those for export, which could slow sales more than expected ahead of the country’s new export quota due to commence mid-February.

Adding to the supportive feel, Ukraine had already shipped 16 mln t of its agreed yearly wheat quota of 25.4mln t this season by the end of December, up 28% on the year to date.

Brazil’s summer corn harvest has just commenced, with winter corn seeding just starting, amid concerns over dry soil moistures despite recent rains.

EU soft wheat exports for the 2021/22 season had reached 15.3 mln t as of 16 January, up 5.3% compared with this time last year, although French numbers were reported as unchanged on the week.

Algeria’s state grain buyer OAIC purchased around 600,000t of milling wheat last week, in which French wheat was again reportedly overlooked.

On a more bearish note, Buenos Aires Grain Exchange has reported that Argentina’s 2021/22 wheat harvest produced a record 21.8 mln t, beating the previous all-time high of 19 mln t.

Overall, global fundamentals remain neutral to slightly bearish. However, wheat markets for the near future will be driven by events in the Ukraine, with any escalation, or possible military action, seen as a bullish factor.

Looking further ahead, forecasts suggest Russia may harvest 82.4 mln t of wheat in 2022, up 9% on the year, which could allow exports to reach 38 mln t in 2022/23.

* For more information on UK milling wheat market prospects, catch up with milling wheat trader Jeremy Pope and junior trader Rosie Fox on the ADM Agriculture YouTube channel.

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

Another mixed session on Wednesday saw US stocks closing lower, along with the US dollar. Agri-futures bucked the trend and closed higher. 

Rumours that China was back in the market to buy US beans ahead of the Phase 2 trade talks with the US increased fund buying activity in agricultural markets.

Everyone seemed to return from the long weekend looking for something to trade. Beans closed lower, but found support from stronger export numbers. The National Oilseed Processors Association (NOPA) released its crush figures for December, which were better than expected, giving the market some support.

South American weather still has rain in the forecast for the end of this week before becoming dry again, but wet weather is pressuring prices. USDA attaché lowered its Brazilian production estimate to 136 mln t from USDA’s 139 mln t. 

Malaysian palm oil closed sharply higher on Wednesday after falling on a 20% rise in stocks at the start of the week. Crude closed lower after rallying to over $85 this week. Veg oils eventually followed suit and markets were mixed Thursday morning. Asian markets are higher, but crude and soy-oil traded slightly lower. 

Canola rallied $30, but still trades below contract highs.

MATIF rapeseed closed €13 up in the end at €700, which was a relief given the €20 fall we saw late Tuesday evening. Margins are still under pressure and there seems little appetite from crushers to own seed at these levels. Prices remain extremely volatile and are likely to do so until we see rapeseed buy some demand.

Sterling has firmed to 1.2000, pressuring UK values.