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Weekly grain and oilseeds market view from Europe, March 5


In the UK, the wheat market continues to lack any notable consumer buying interest.


Global wheat and corn markets have been undergoing a period of relative stability over the last couple of weeks.


Delayed South American soybean supplies keep global oilseeds markets tight.



What to watch

Uncertainty over Russian exports remains.



Global grain

Period of relative stability for global markets

Global wheat and corn markets have been undergoing a period of relative stability over the last couple of weeks.


The corn bull run has taken a break from pushing ever higher as demand from China has been absent from daily US export sales.


Markets are questioning how much more corn is needing to be sourced from the US or whether China is now well enough supplied to wait for the upcoming Brazilian harvest.


Looking to the Southern Hemisphere, and while conditions in Argentina are still far from ideal, production estimates are holding up fairly well considering La Nina conditions.


The bulls in the market will now look to the planting of the larger Brazilian Safrina corn crop, weighing up the potential risks of delayed development with an increase in area.


Looking ahead to the US, corn planting is just beginning. Yet with the memory of the wet 2019 spring planting campaign still fresh in the mind, this uncertainty is likely to maintain a good degree of support until confidence literally and metaphorically grows.


Placing the tight EU wheat stock situation to one side, global wheat markets have also been searching for new bullish factors to drive markets higher.


The uncertainty is focused on the US, where winter wheat is in poor condition following the exceptionally cold spell and in Russia where it remains unclear what spring planting intentions will be following the political interference.


Peter Collier, CRM AgriCommodities


European grain

Demand for EU wheat continues to increase

Continued tightness in the EU wheat market saw front-month Matif prices jump to an eight-year high (E252.50 per tonne) on the first trading day in March, although values have since fallen back to mid-February levels due to profit taking, closing on Wednesday at E237 per tonne.


Internal demand for EU wheat is increasing, mainly due to lower maize imports. As such, EU prices are expected to remain firm overall to try to limit exports, reported at 17.5m tonnes as of the end of February.


Recent international buying has slowed, mainly due to the price rise, but it is envisaged that key buyers in North Africa and the Middle East will need further supplies ahead of their own harvests.


Russia’s export tax is now E50 per tonne, which will slow the country’s exports considerably. In addition, Ukraine only has about 3.75m tonnes of its export quota remaining, so EU prices may remain competitive, although Argentinian wheat just about works into North Africa.


Rumours that China is considering further cargoes of French wheat would further reduce EU stocks, already at a historical low level.


Looking ahead, uncertainty over Russian exports due to the floating export tax which commences June 1 remains. Russia would normally export 10-12m tonnes of wheat over the harvest period so traditional buyers may have to look elsewhere.


Demand for wheat for food and feeding looks set to remain strong within the EU and for export.


David Woodland, ADM Agriculture



Oilseeds market

Delayed South American soybean supplies keep markets tight


Weather in South America refuses to diminish in importance for oilseeds markets, with both Brazil and Argentina again witnessing unfriendly crop conditions.


Widespread rains in Brazil are hampering not only soybean harvesting, but also the logistical effort of getting freshly harvested supplies to ports. Crop quality concerns are also mounting, but a record soybean crop is, nonetheless, anticipated.


Meanwhile, the fading remnants of the La Nina event are pushing more dryness across Argentina’s already parched cropping regions. Potential crop downgrades are already hitting the headlines.


On the demand side of the equation, domestic Chinese soybean demand remains robust, with prices setting fresh contract highs last week and considerably above where it can import supplies from the Americas. As such, we can discount any ideas that China may renege on already-bought supplies.


Indeed, reports suggest over 100 Panamax vessels are currently awaiting loading at Brazil’s ports.


While this is a key driver of the global oilseeds market at present, the veg oil market is equally influential. The palm oil market is facing dislocation, too.


Exports are being hampered by Covid-19 related labour restrictions in Malaysia, meanwhile China is seeking large supplies. The net effect is that alternative oilseeds prices are on fire, with Chicago soyoil, Winnipeg canola and Paris Matif rapeseed prices all setting fresh contract highs last week.


Rupert Somerscales, ODA

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