UK prices have fallen back from the highs seen in January.
Chinese buying frenzy puts a serious dent in US corn stocks.
The Russian wheat export tax situation was adding support to global markets but the full impact remains unclear.
What to watch
Grain and oilseed analysts were watching Brazil to see the impact of wet weather on soybean harvesting and corn plantings.
UK wheat feels pressure of a weaker world market
After reaching a multi-year high in the middle of January, wheat futures have fallen about £12 per tonne, pressured by a general weakening in global values.
Despite the downturn, internal market fundamentals remain little changed as the UK still needs to import wheat to balance the supply and demand equation for this season.
Imports, reported at 1.1m tonnes to the end of November, would have to stay at that pace to achieve the 2.5m tonnes we believe would be required to achieve that balance.
However, trying to gauge the extent of domestic demand is not easy.
Covid-induced lockdowns have caused a steady decline in wheat demand since last November. How quickly restrictions are relaxed and freedom of movement is extended will determine how quickly food, feed and industrial demand gets back to some form of normality.
Consumers appear to have decent cover through the first quarter of 2021, so there is limited demand coming forward, which is adding to the current negative tone.
However, for April-June 2021 we believe that most consumers will have to return to the market.
That, together with the UK’s continued need to import wheat, should provide longer-term support to prices.
David Woodland, ADM Agriculture
French wheat wins big in Egypt’s tender, but unwelcome rains due for the week ahead
France was the big winner in Egypt’s Gasc wheat tender this week, booking 240,000 tonnes of the 480,000 tonnes bought, with Russia, Ukraine and Romania set to supply the remainder.
Prices were sharply higher than Gasc’s previous tender, at $311 cost and freight (C&F). Offers from all four nations (France, Russia, Romania and Ukraine) were all within $1 of each other.
Notably, the purchase was for delivery in late March and with French ports already committed to shifting 1m tonnes during this month, export logistics will be under more stress.
Positively, much of the Continental landmass has enjoyed above-average temperatures in the last week, but a cold snap is set to descend into grain growing parts in the next week-fortnight timeframe.
On the negative side, widespread rainfall is also forecast and, while it will not be unwelcome in parts of eastern Europe, sodden French fields will now take longer to dry out.
In trade policy news, it is becoming increasingly likely that Russia will bring into play export taxes on its grain exports for the new season, as well as for old crop.
The market is focusing on wheat exports, but barley and corn exports are also reportedly in the firing line.
Rupert Somerscales, ODA
Attention remains on Brazil’s soybean harvest
Global oilseed markets continue to focus on Brazil and the soybean harvest.
The rain has pushed the harvest back and it is quoted as one of the slowest harvests in 10 plus years. This has not helped the situation with export sales – there are reported to be sales of close to 9.4m tonnes with only a few 100,000s of tonnes loaded.
Buyers will be getting frustrated and ship owners will be keen to get to the front of the queue, but if beans are still in the field the stand-off will continue.
Another point that is likely to further frustrate the issue is the ability of truck drivers to go on strike at very short notice. The overall flat price of soybeans is another concern.
There are more reports of cancelled contracts as crush margins are rumoured to be falling in China.
As the largest importer of soybeans globally, it does make the market very vulnerable to sharp price swings.
The price of soybeans has had an interesting effect on EU rapeseed – with soybeans no longer at a major discount to rapeseed, many consumers have looked to switch back to rapeseed and the crush margins have been positively amazing if plants can source product.
Shipments from Australia are arriving on a regular basis and only this week Strategie Grains increased its rapeseed third country imports for 2020-21.
Certainly, a market to keep an eye on but many consumers will be only too keen to find a cheaper alternative at current levels.
Cecilia Pryce, Openfield