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Weekly grain and oilseeds market view from Europe, November 29


Wheat futures rebound after dipping lower in a couple of sessions.


Since the beginning of the month, Paris wheat futures have gained, supported by a firmer global market.


Global oilseed markets have taken a rough path over the last few weeks.



What to watch

New crop is all about the weather and how much is planted.



May 2020 London wheat futures closed on November 28 at £150.25 per tonne, up 1.1% week on week.


March 2020 Paris wheat futures settled at E183.75 per tonne, up 1.1% week on week.


February 2020 Paris rapeseed futures settled at E387.25 per tonne, down 0.7% week on week.



UK grain

New UK crop prospects worsen

The UK’s November 2019 London wheat futures contract expired this last week, settling at £140.80 per tonne.


During its lifetime the contract has traded between £129.75 and £174.90 per tonne. Attention now turns to the May 2020 position.


After a couple of sessions in which UK wheat futures dipped lower, values have started to rebound again.


This is despite a slightly stronger pound and further weakness on the influential Euronext and Chicago futures markets.


AHDB released its preliminary Early Bird Planting Survey results on Monday.


The data shows the area sown to wheat forecast to be 9% lower than last year, at 1.645m hectares.


If realised, it would be the lowest area sown since 2013.


AHDB will re-do the survey in the new year, which will include very late drilling information. These numbers appear quite optimistic in our view.


Clearly, ahead of drilling, farmers and the trade were anticipating a substantially larger wheat area and, as a result, the market has been trying to take a sharply lower 2020 production outcome into consideration.


While the market’s focus has primarily been on new crop prospects, the old crop market has also benefited.


Farmers are, in the main, reluctant sellers of anything right now and with merchants likely to have added to their sales books recently, nearby cash markets are tightening up.


Rupert Somerscales, ODA



European grain

Export interest underpins EU wheat market

Since the beginning of the month, Paris Matif wheat futures have gained E4 per tonne, supported by a firmer global market.


Continued interest from exports – the soft wheat tonnage is just over 50% higher on the year at 10.77m tonnes – and competitively priced EU wheat continue to underpin cash values, especially given the onset of the festive period and associated slowdown in ex-farm sales.


With most key international buyers covered into the new year, markets may pause for breath, which may leave them open for bouts of profit taking.


Reports that the president of Russia’s Grain Union expects prices to become more competitive due to the country’s slow export pace may provide some resistance against higher prices, particularly with talk of a bigger wheat area for 2021-22.


However, the EU’s crop monitoring unit predicts this autumn’s heavy rains will reduce the wheat area in France and the UK.


In addition, weather conditions are not ideal across Europe – too wet in the west and too dry in the east.


In the Black Sea region, much lower temperatures are forecast, with no snow cover to protect recently sown and emerged crops.


In summary, the outlook as we enter the new year will depend on how aggressive Russian prices become and how they compare with export values.


Further ahead, new crop is all about the weather and how much is planted.


David Woodland, ADM Agriculture


Oilseeds market

Rough path for oilseeds

Global oilseed markets have taken a rough path over the last few weeks. The highs have been matched with similar lows as news stories never seem to send the markets in the same direction.


The EU continues to import rapeseed, with amounts now reaching over 1.46m tonnes more than this time last year.


The speed of arrival is relatively fluid, but with the Australian ships looking to be lining up – regardless of their smaller crop - it feels like imports will keep the lid on any price upside short-term.


The debate over palm oil and soyoil and their environmental criteria seems never ending, with added uncertainty raised by Brazilian farmers planning on lifting the Amazon soy moratorium.


Consumer power is something we all need to be following, as the impact on trade could prove to be more powerful than ever expected.


With US cargos of soybeans still not discharging in China and with South American soybeans having been more price competitive recently, tempting new Chinese purchases, it would be a brave trader to anticipate where prices go next, especially with a continued lack of trade deal clarity.


Cecilia Pryce, Openfield



UK organic arable

Different dynamic for organic cereal markets

Poor autumn conditions have hampered autumn planting over recent weeks, with some farmers reporting they have not drilled any organic winter crops.


While this has led to a strengthening of conventional wheat values as markets foresee a far smaller UK wheat harvest, the same dynamic has not been seen in the organic market for the following reasons:


  1. The UK organic sector is far less reliant upon winter plantings, with many organic farms having a reasonably even split between spring and winter planting.


  1. The UK organic wheat market is largely driven by imported grain from the Black Sea. The Defra crop area figures published in 2019 indicate the organic wheat area down to just 8,000 hectares.


If it is assumed the aggregate yield is down by 1 tonne per hectare, it would require an additional 8,000 tonnes to replace this which is simply an additional cargo of Black Sea grain.


The conventional market is far more geared to both wheat and winter cereal production therefore making the impact of the poor autumn drilling far greater.


  1. The organic cereal market works on a physical market rather than a futures market to price grain - one of the differences that is misunderstood.


Current supplies are readily available and so buyers remain confident they can source what they require.


Why would they offer more now based on current UK conditions when prices next season will be influenced by currency and crop conditions in Eurasia?


So what does this mean for values?


There is quite a spread in the market, with some buyers paying more to support UK production.


For these buyers a value of £250 per tonne ex-farm for organic feed wheat is available but for those focused on imported supplies, a value of £235 per tonne is more likely.


Feed barley is at parity with wheat, with feed oats a further £5 per tonne discount.


Beans are worth £355 per tonne ex-farm, but cheap offers of organic peas are eroding that value.


Milling oats are trading at £260-280 per tonne ex-farm and so continue to outperform other crops.


Andrew Trump, Organic Arable

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