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Weekly grain and oilseeds market view from Europe, January 24

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Global markets are watching the US-China trade deal closely and any extra demand from China.

 

There is also some nervousness about the viability of new crop plantings.

 

 

Weather woes are continuing to drive UK wheat markets higher, with many growers still waiting for a dry spell to drill.

 

EU wheat exports are flying, topping 15.7m tonnes of wheat since the beginning of the marketing season compared with just 9.2m tonnes in 2018-19 and 12.8m tonnes on the five-year average.

 

 

What to watch

Strike action in France which is affecting its export facilities is also creating a technical rise in French wheat futures as shorts try to buy back their positions in the nearby contract.

 

London May wheat futures closed on Thursday at £157.45 per tonne, a rise of 0.8% week on week.

 

London March wheat futures closed at E196.25 per tonne, a rise of 1.7% week on week

 

Paris May rapeseed settled at E404.50 per tonne, up 0.4% week on week.

 

 

Global grain

Global markets on upward trajectory

Global grain markets have spent most of the week on an upward trajectory.

 

The reasons seem to be varied, but look to have arisen through general lack of clarity as to the supply of grains in the immediate and distant future.

 

The spot supply of commodities seemed to be frustrated in many counties, with logistics and farmer retention, resulting in shippers trying to source other well priced alternatives.

 

This matched with a new Algerian tender and a few technicalities on spot futures contracts and uncertainty on new crop planting have left markets open to unpredictable moves.

 

On paper there should be enough cereal commodities to ‘feed’ all consumers but in a global marketplace that still expects some demand from China in the coming weeks, post the signing of the first US-China trade deal, any perceived interest from bulls is likely to get some follow through.

 

The reality is the markets are nervous and are likely to remain so for a while longer, until there is more global confidence in old crop supplies and the viability of new crop plantings.

 

Cecilia Pryce, Openfield

 

 

European grain

Global demand and logistic issues push EU wheat higher

New week and new high for spot Euronext wheat which has just reached its highest level since last year’s Valentine’s Day [February 14].

 

The key E200-per-tonne level is now in sight.

 

Global demand from top importers such as Algeria or Egypt is still robust as per the most recent from the European Commission.

 

As of January 20, the EU had already exported 15.7m tonnes of wheat since the beginning of the marketing season compared with just 9.2m tonnes in 2018-19 and 12.8m tonnes on a five-year average.

 

France accounts for more than a third of this year’s EU wheat exports followed by Romania (19%), Bulgaria (9%) and Latvia (9%).

 

However, the prolonged French pension reform strike which started on December 5 has hampered grain deliveries to the ports and as such, the competitiveness of the French origin has deteriorated due to additional transport cost with railways shut.

 

That said European wheat values could still continue to be supported short term with Russian prices standing at fresh season highs and until more is known regarding the 2020 Black Sea wheat harvest.

 

Benjamin Bodart, CRM AgriCommodities

 

 

Oilseeds market

Falling global markets peg back EU rapeseed values

Following initial trade disappointment after the signing of phase one of the US-China trade deal, the markets reverted to a “buy the rumour, sell the fact” scenario.

 

US soybean prices have fallen hitting a six-week low, with soymeal touching an eight-week low.

 

Fresh news was limited, but the prime concern remain the apparent lack of Chinese buying interest after the trade signing, amidst cheaper South American prices, and a Brazilian harvest that is reporting early yields 10-15% above those of last year.

 

Pazris Matif rapeseed posted early gains yesterday, but finished the day unchanged, pressured by a fall in Asian veg oil prices, with Canadian canola also lower on the recent reversal in US soybeans and soyoil prices.

 

Asian markets were mostly higher, with Malaysian palm oil up on some estimates of lower domestic output, and hopes of Indian import tax cuts.

 

In summary, there is no real change to the markets, with South American weather, Chinese soybean demand and US spring acreage providing the major inputs, and what might occur if China doesn’t buy US beans.

 

David Woodland, ADM Agriculture

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