Weekly grain and oilseeds market view from Europe
By - Published 06/10/2017

In Russia, there has been huge demand for wheat exports, meaning prices have remained strong in spite of the huge harvest.

UK wheat prices continue their post-harvest recovery, despite sterling strengthening which should weigh on domestic prices, due to tightness in the market.

And rapeseed crops for the 2018 harvest seem to be mostly in good condition, although flea beetle damages continue to be reported locally.  

Key trends

The gap between UK feed wheat and feed barley has recently widened, with malting barley premiums also on the rise.

In Europe, there has been a dramatic change in exports year-on-year with wheat exports more than 2m tonnes lower compared to the same week a year ago. But maize imports are 1.3m tonnes higher.

Things to watch

The market is watching the South American weather and the US soybean harvest for the next direction oilseed prices will take.


Global grain

Russian export demand very strong

Russian prices remained strong, in spite of the huge harvest, predominantly because export demand is very strong and there is insufficient logistical capacity to get supplies to and out of the country.

Since Russia has a massive export programme this season, it is likely to be a much greater problem this winter.

In the US, farmers have been struggling to plant their winter wheat crop due to dry weather conditions, anticipated rains should improve this situation.

Much-needed rain is also expected in Australia across the next fortnight.

In last Friday's US Department of Agriculture report on production and inventory statistics, spring wheat production was much higher than expected at 11.3m tonnes, versus traders' average expectations of 10.4m tonnes.

The barley harvest is drawing to a conclusion in Russia.It had some harvest rains last week, which hampered progress for winter planting.

Russia's exports are still marginal. Since barley prices are relatively attractive at present, the country's agriculture ministry believes the sown acreage for the 2018 harvest is likely to rise 6% year on year.

Elsewhere, Argentina is still experiencing overly wet conditions after the heavy rain in recent weeks. Further rain is forecast, which could crimp yields and delay the November harvest.

Port prices for barley rose again in Ukraine and Russia last week, currently standing at $186 per tonne FOB.

Gary Philips, ODA


European grain

European markets 'obsessed' by the lack of exports

European grain markets seem to be obsessed by exports - or, as many will say, lack of them.

The weekly trade data continues to show a dramatic change in exports year-on-year with wheat exports over 2m tonnes lower compared to the same week a year ago, while maize (corn) imports are 1.3m tonnes higher.

The change in crop sizes and quality has a lot to answer for, but so does the EU's need to feed itself.

Many seem to forget that Spain has an import demand for grains which could be close 16m tonnes this year, compared with 11.5m tonnes last year.

This tonnage is split between maize, wheat and barley. But ultimately with a maize import tax and no new zero levy wheat tariff rate quota (TRQ) available until January 1, much of the wheat demand will have to come from other European Union origins which is helping support domestic prices.

The bubble may burst later in the year when the new TRQ quotas are opened, especially with the Ukraine TRQ levy free amounts on the rise to just above 1m tonnes.

The arrival of the Black Sea maize crop is also being watched closely to see if it comes up to expected tonnes and can maintain its price spread against wheat. But then all eyes will revert to the Black Sea logistics.

Cecilia Pryce, Openfield

UK grain

UK wheat continues its post-harvest recovery

London wheat futures continue their post-harvest recovery, having reached on Wednesday (October 4) their highest in two months and recouping about £7 per tonne from the end-of-August lows.

Over the same period of time, sterling gained 3.9% against the euro which reflects the tightness of the UK market, as a strong pound should weigh on domestic prices in order to make UK origin more competitive on the export market.

Furthermore, farmers hope for better prices after a rather frustrating wet harvest which is still on up in the North and they are not keen sellers at current levels. The latter element has resulted in firmer ex-farm prices in recent weeks.

Despite a buoyant UK barley export programme, the gap between feed wheat and feed barley has recently widened to around £14-16 due the lack of wheat sales.

For malting barley, premiums are also on the rise, standing at their highest since 2011-12 for this time of the season amid quality issues.

Looking ahead, rapeseed crops for the 2018 harvest seem to be mostly in good condition amid clement conditions since plantings, although flea beetle damages continue to be reported locally.

Benjamin Bodart, CRM AgriCommodities

© Agrimoney 2017