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

Markets await the USDA report later today and eyes will be fixed on the US maize (corn) numbers.

USDA is expected to cut its production estimate which, along with talk of increased buying interest from China, will point to a much tighter US maize balance sheet.

However, higher wheat production forecasts from Canada, Russia and now Australia suggest no shortage of global supplies and will provide resistance to higher wheat prices, unless we see a real surprise in the maize numbers.

In more detail, US wheat values are down $5/t on the week amid talk of increasing export competition. Conversely, maize prices are about $1/t higher, reflecting trade expectations of lower yield and area forecasts in USDA’s report.

Russia’s agriculture ministry predicts a total grain crop of 122.5mln t, unchanged from its previous forecast in July. SovEcon has raised its forecast for this season’s Russian wheat crop to 82.6mln t, up from 81.2mln t previously.

Russian wheat export prices continue to firm, due to lack of ex-farm sales in the wake of a heavy export programme.

Ukraine’s Grain Trade Union puts the country’s 2020 wheat crop at 26.6mln t, while maize output is expected at 35.3mln t. Exports are forecast to hit 17.5mln t and 29mln t respectively.

ABARES has raised its forecast for Australia’s wheat crop to 28.9mln t, from 26.7mln t in June, after heavy rains across the east coast boosted prospects.

Recent rains have also bought relief to parched fields in central Argentina, although damage to yields was expected to be irreversible after months of extraordinary dry weather.

UK futures (London) have bucked the global trend, rising over £5/t on the week. The main driver was the fall in the value of the pound as concerns mount over Brexit and the tariff regime that may come into force on 1 January 2021.

UK spot ex-farm prices have followed, spurred by harvesting delays and general tightness of supply, despite the arrival of imported feed wheat vessels.

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

CBOT soybeans traded higher for the twelfth session in a row this week.

Chinese buying continues daily, supporting nearby prices. Managed funds also continue to buy soybeans futures, taking their long positions close to levels not seen since 2016 and 2018.

Soybean ratings declined again this week, adding support. USDA reduced the good/excellent rating to 65%, down 1%, but better than some trade expectations of 2%.

USDA is likely to adjust some figures in its report later today as a result of the storm back in August, but that’s likely to impact corn more than soybeans. The report is likely to adjust Brazilian soybean exports and probably Chinese import figures, as well as reducing expected US production for 2020/21.

Weather in Brazil is starting to cause some concerns, with dry conditions likely to delay plantings until October, which would keep the US in the market until late January/early February.

Crude oil prices tumbled more than 9% at one point on growing fears of reduced global oil demand. Saudi Arabia cut prices below the benchmark for the first time since June to try to create further demand. West Texas Intermediate traded at $36.74/barrel; it was close to $43 in August.

Matif rapeseed returned to recent resistance levels this week, but fell as oil prices weakened. The market has tried to break €385 on the November Matif several times recently, but with EU coverage looking good for the rest of this calendar year and imports still being available, a new story was needed to feed the bulls.

UK prices were again supported by the weaker pound. Sterling fell from 12-week highs, down 1% against the euro in yesterday’s session alone, as investors started to become nervous over increased Brexit tensions and how a no-deal might play out for the UK.