Farming News - Wheat harvest starts in south, but it is far too early to predict any trends

Wheat harvest starts in south, but it is far too early to predict any trends

24 Jul 2020
Frontdesk / Arable / Finance

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

Harvests are progressing in the northern hemisphere and prices have eased, despite a backdrop of slow ex-farm sales.

Combines have cut almost three quarters of the winter wheat in the US, where values slipped $5/t on the week. However, US maize prices have remained stable, supported by trade talk of increased demand from China due to reduced domestic production

US weather remains favourable for spring crops. Both maize and soybeans will enter key development stages over the next few weeks.

French farmers had harvested 47% of this year’s wheat crop as of 13 July, up from 11% a week earlier and well above the 26% seen the same time last year.

Early cut wheat in the south was poor, but is improving as harvest moves north into the Paris basin. Yields are very variable but quality seems to be OK.

It’s a similar picture for the UK. Wheat harvest has started in southern counties, but it is far too early to predict any trends.

Recent poor weather in Russia has affected grain yields. Further downward crop revisions are possible.

Official May usage data for the UK came in as forecast and, although exports were slightly higher than expected, end-of-season stocks are still expected to hit a historically high figure.

With farmers here more concerned with harvesting rather than marketing, spot delivery premiums have risen as merchants look to cover outstanding July and early August requirements. The scale of the rise will be short lived as harvest activity increases and additional supplies become available.

In other news, China is reported to have bought seven cargoes of Australian wheat. Traders believe China is ensuring it fills its WTO import tariff quota.

Egypt’s state buyer GASC purchased 115,000t of Ukrainian wheat at its latest international tender. The economy minister has now stated that wheat reserves are sufficient for five to six months.

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

Recent Chinese purchases of US soybeans have offered the market some support at a time when CBOT soybeans are pressured over concerns that US/China relations may take a turn for the worse.

China bought 715,000t of US beans on Wednesday, 66,000t of old crop and the balance for 20/21. A further 211,300t was sold to an unknown destination.

Weather in the US is becoming more favourable for the next seven to 10 days. Soybean crop ratings improved 1% this week to 69% good/excellent, falling in line with trade expectations. Yield potential of 49.8 bushels/acre looks on track for now.

Crude oil prices hit a four-month high this week, achieving levels not seen since the Saudi-Russia break-up in March. The promising news of a new vaccine and the EU stimulus package gave the market hope that demand may return to “normal”.

Veg oil prices remain firm. Palm oil is trading close to contract highs and is now in “overbought” territory. Malaysian palm futures have risen 12% on nearby positions since 10 July. Demand is returning from some key importing countries and there are concerns over supply issues, especially with reduced labour forces in some Malaysian plantations.

In Canada, crop conditions across the prairies remain favourable, with Manitoba receiving rain in recent days. Crop estimates are starting to rise for this season, some pegging production at 20mln t compared with the current government estimate of 18.87mln t.

Matif rapeseed remains within a €5 trading range. Harvest in Europe is progressing, but is still behind normal and yields remain variable.

Sterling’s volatility continues on the back of the EU recovery deal and budget report. UK farm prices are still trading at season highs, supported by the weakening of the pound over the past few days.