ADM Agriculture comments on the Wheat & OSR markets

WHEAT

• Prices have steadied since last weekend when markets were rocked by lack of progress in US/China trade talks and President Trump’s threat to introduce tariffs on Chinese exports today (Friday).
• US spring sowings and crop development continue to lag last year and the five-year average due to the poor weather. But moisture is benefiting winter wheat.
• An increased area and favourable weather is expected to produce record Brazilian and Argentinian wheat crops.
• Return of rain in the EU and Black Sea region has enhanced prospects of a sharp rebound in wheat production for 2019. Russian estimates are now at 83.4mln t, up 12mln t year on year.
• UK prices gained support from a weaker sterling due to concerns over Brexit.
• USDA will release its initial 2019-20 global crop forecasts later today. It is expected to predict larger wheat/corn crops and stocks, which may continue to weigh on market values.

OSR 

• Chicago soybeans made new contracts lows this week on the back of US/China trade deal problems (see above).
• Widespread flooding in the US is causing substantial logistical problems. Farmers are planting corn where they can, while soybean plantings lag the five-year average (6% vs 14%).
• USDA’s world supply and demand report released later today is predicted to be bearish. Soybean harvest in Brazil is virtually complete and average trade estimates are close to USDA’s last estimate of 117mln t. Harvest in Argentina is 60% complete and yields are better than expected ­– trade estimates 55.72 mln t vs. USDA’s last estimate of 55mln t.
• In Canada, the situation remains political. Despite StatsCan estimating 2018/19 ending stocks to be 10 mln t at the end of March (9.1 mln t last year), prices have bounced from contract lows.
• Rain is falling in parts of Australia but the optimum sowing time for canola is running out.
• European rapeseed prices are trading below recent highs – vegetable oils prices have weakened as a result of higher-than-expected palm oil stocks.
• The trade remains concerned over the state of next year’s rapeseed crop. Soil moisture across parts of France and Germany are well below average. Crop estimates are now as low at 18mln t, the lowest for 13 years.
• In the UK, prices are trading within a narrow range. Sterling continues to play a key role in farm gate prices.