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Weekly grain and oilseeds market view from Europe, February 28

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Despite bullish UK wheat market data published by UK farm ministry Defra and the AHDB bureau late last week, domestic prices have subsequently dropped lower.

 

Uncertainty surrounding Covid-19 and how its impact is being and will be felt has encouraged global traders to favour a risk-off position.

 

In the Black Sea, the production outlook for the 2020 harvest remains good with winter losses close to zero amid ongoing above normal temperatures coupled with replenishing soil moisture.

 

 

What to watch

The spread of coronavirus into Europe and its possible impact on global commodity and feed demand continues to drive the markets.

 

 

London May wheat futures closed on Thursday at £150.25 per tonne, a fall of 2.1% week on week.

 

Paris May wheat futures closed at E187.00 per tonne, a decline of 3.2% week on week.

 

Paris May wheat futures settled at E387.25 per tonne, a dip of 3.5% week on week.

 

 

Organic arable

Challenging market for organic feed grains

Buyers are reporting good cover for feed grains through until late in the season.

 

The ability to sell feed grains in the current market is challenging and the loss of malting barley export markets into Belgium due to uncertainty over Brexit, earlier in the season, means barley, in particular, remains unsold on-farm.

 

The growth in supply from the Baltic states, which have sought to establish their position in the market, has resulted in downward pressure on prices.

 

Other markets are also well covered, with both flour and oat millers reporting good cover and so anyone with grain left to sell should be coming forward and not expect immediate movement.

 

We need to see a greater propensity from buyers to use UK grains ahead of imported supplies.

 

The integrity and traceability of UK supplies needs greater emphasis in sourcing decisions from farm-level through the supply chain to fulfil organic consumers’ expectations of the products they buy.

 

Our over-reliance on imported supplies is a strategic weakness for the whole organic sector and needs addressing.

 

Andrew Trump, Organic Arable

 

 

European grain

EU grains lower as coronavirus spreads globally

The price of Euronext Paris wheat fell to its lowest level since the beginning of the year, and it was set to snap a three-week winning streak due to falling Russian prices and the rapid global spread of the coronavirus, particularly in the Middle East and Europe.

 

Italy now has the largest number of Covid-19 cases outside China and the second-highest number of deaths outside China after Iran, with a dozen towns in the regions of Lombardy and Veneto (northern Italy) placed under quarantine.

 

The full impact on demand is still difficult to quantify but it could be more severe than initially thought.

 

According to this week’s European Commission trade data, EU wheat exports fell for a fourth consecutive week, yet more than 18.7m tonnes have been exported since early July, or the best performance in seven years.

 

Conditions remain mixed across the bloc, with further unwelcome rains in the west, while improving soil moisture is noted in the east after a dry start to the season.

 

In France, only 65% of the winter wheat was rated good/excellent as of February 21, compared with 85% last year and 90% on average.

 

The surprisingly-rapid spring barley plantings progress (20% complete versus 21% last year) could now slow, with above-normal precipitation forecast over the next 10 days.

 

In the Black Sea, the production outlook for the 2020 harvest remains good, with winter losses close to zero amid ongoing above normal temperatures coupled with replenishing soil moisture.

 

Benjamin Bodart, CRM AgriCommodities

 

 

Global grain

Trade flows could change dramatically

Global grain markets are currently in great flux.

 

Uncertainty surrounding Covid-19 and how its impact is being and will be felt has encouraged global traders to favour a risk-off position.

 

The world will need to eat but with the uncertainty as to the availability of a workforce either to process foods, feed/slaughter livestock, or even stock shelves, many companies are checking how long supply lines could be maintained if even more countries are forced to hit the lockdown button.

 

Trade flows could change dramatically in the short-term with the likes of China maybe looking for ‘instant’ prepared foods for the human population rather than feedstocks for livestock, which could mean fewer bulk commodities being moved short term.

 

Accurately predicting ‘lockdown’ periods as well as fully understanding the implications on local supply chains could provide domestic opportunities for many while focusing governments globally to consider domestic food self-sufficiency, especially in the light of so many recent weather concerns.

 

Cecilia Pryce, Openfield

 

 

 

Oilseeds market

All eyes on coronavirus

The spread of coronavirus into Europe and its possible impact on global commodity and feed demand continues to drive the markets.

 

Soybeans this week traded down to a nine-month low as traders remain wary of possible delays to China buying US products.

 

However, Beijing’s waiver on duties from March 2 on many US agricultural products is raising hopes of some signs on Chinese activity.

 

Apparent favourable weather in Brazil is adding to the pressure on US soybean futures, which has raised talk of record 2020 soybean production.

 

That said, drier conditions in Argentina may reduce previous optimism over the country’s crop prospects.

 

Energy and oil markets have also felt the pressure, trading lower during the past week, in particular reacting to the sharp fall in Malaysian palm oil prices.

 

In Australia, recent heavy rains will allow spring sowings to hopefully get off to a better start, although some areas remain very wet with localised flooding.

 

Paris rapeseed futures were pressured by the weaker soybean market, but managed to recoup some of their losses in recent sessions before facing renewed pressure as the US dollar slipped from recent highs against the euro.

 

In the UK, AHDB has forecast the rapeseed area at just 361,000 hectares, down 32% on the year.

 

David Woodland, ADM Agriculture

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