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

With little coming from USDA in last week’s report, weather has been driving the markets. Cold and drier conditions across much of the US, Canada and EU has led to increased speculative buying, pushing the market considerably higher over the past week.

Additionally, renewed dryness concerns relating to Brazil’s second corn crop and the slow Argentinian corn harvest have supported higher global corn prices, providing external support to the wheat complex.

While it may be too early to start writing off crops, there are enough weather-related issues to support the recent spike, as US spring sowings progress and northern hemisphere winter crops develop in far-from-ideal conditions.

UK conditions are also less than perfect and there is little to no rain forecast in the next few weeks. Prices have rebounded and will probably be supported whilst current weather conditions prevail.

In more detail, USDA’s report produced little surprise as lower 2020/21 US corn stocks came in line with trade expectations, while wheat stocks were increased slightly on the month.

Analyst IKAR has raised its forecast for Russia’s 2021 wheat crop to 81mln t, up from 79.8mln t previously, citing an improved crop outlook in the southern regions of the country.

France’s agriculture ministry estimates the 2021 wheat area (including spring crop) will be up 14.6% on the year at 4.9mln ha.

FranceAgriMer estimated 87% of the country’s 2021 soft wheat crop was in good/excellent condition as of 5 April, unchanged on the week.

Argentina’s corn harvest plods along, reported at 12% complete as of 8 April, compared with 26% this time last year and 21% as the five-year average.

While increasing the Brazilian 2020/21 corn crop to 109mln t, statistics agency CONAB reduced the country’s 2021/22 wheat crop to 6.37mln t.

Turning to old crop, FranceAgriMer has raised its forecast of 2020/21 French wheat exports to 7.55mln t, with ending stocks remaining unchanged month on month at 2.7mln t.

Russian wheat exports slumped in March after the wheat export tax was increased to €50/t, with total grain exports reported at 2.4mln t.

Ukrainian grain exports have fallen 23.7% to 36.5mln t so far this season, with traders selling 14.5mln t of wheat, 17.3mln t of corn and 4.1mln t of barley.

China’s agriculture ministry has significantly raised the forecast for 2020/21 corn imports to 22mln t, reflecting strong domestic demand, although the number lags USDA’S figure of 24mln t.

UK wheat imports slowed in February to just 94,956t, although the accumulated season-to-date figure of 1.67mln t is still well above last season’s pace.

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

CBOT soybeans started the week by reacting to last Friday’s USDA report that left the bulls disappointed. Global ending soya stocks increased from 83.74mln t to 86.87mln t and the US carryout was left unchanged.

Despite starting off the week heavily down, the market rebounded to where it originally started. US weather fears are becoming a bigger factor as the weather will have to be good to match market expectations. Currently US weather is looking drier than normal, with temperatures below average.

The dryness is very supportive of fieldwork, but cold temperatures and lack of soil moisture could begin to reduce germination, which will ultimately reduce the size of the wheat, corn and soya crop. Canada is seeing similar issues and doesn’t have rain in the forecast for the next 15 days.

South American weather is looking dry, allowing harvest to pick up in Argentina and to be completed in Brazil,  where it is all but done.

This week China bought 132,000t of US new crop soybeans. In Q1 China imported a record 21mln t soybeans, but crush demand fell last week as crush margins began to crumble. Possibly another early indication that African swine fever is striking the northern hog herd.

Soyoil continues to be volatile due to various factors. The market was well supported when Egypt put in a tender for 30,000t for June delivery. However, Brazil has temporary reduced its biofuel mandate from 13% to 10% to take some heat of the internal domestic oil price.

Soyoil also had a big sell off when palm oil stocks reached a four-month high at 1.45mln t, which came in way above trade expectations.

Matif has seen large gains, due to concerns over the effect of the cold snap on the EU crop, and new crop is at contract highs. Canada saw a similar effect on old crop as dry weather continues to threaten next year’s supply.

UK prices remain supported with sterling falling sharply against the euro this week.

You can also hear ADM Agriculture’s Jonathan Lane and Freddie Humfrey discussing the latest developments in this week's online grain market update here.