Fast paced EU exports underpin European wheat values, although they have slipped from recent highs. Concerns are growing over the establishment of winter cereals and oilseeds for harvest 2020 in the western Europe.
Global oilseed markets continue to hang onto the on-off US: China trade discussions.
London May 2020 wheat futures closed on Thursday at £145.00 a tonne, a rise of 0.35% week on week.
Paris December 2019 wheat futures closed at €180.00 a tonne, a gain of 1.6% week-on-week.
Paris November 2019 rapeseed futures closed at €379.50 a tonne, a fall of 0.33% over the week.
EU exports remain competitively priced
European markets have continued to consolidate, although they have recently slipped off multi-month highs. Firming prices in both the US and Russia, combined with soft wheat exports from the EU still running 40% ahead year-on-year at 8.5m tonnes, continue to underpin values.
The rise in Russia’s export prices has seen the pace slip behind last year, at a time when that country’s wheat harvest estimate seems to be expanding, due to improved spring wheat yields.
Crop estimates for the past harvest also continue to grow across the EU and the Ukraine. However, recent heavy rain is delaying winter sowings across much of the northern part of the EU, which may result in a greater-than-normal stock carryover. The eastern EU states, the Balkans and into the Black Sea region are experiencing much drier conditions.
A recent flurry of international export tenders (Algeria, Saudi and even Egypt) show EU values are competitively priced, as the recent rally in Chicago would price out US supplies.
Talk of reduced wheat crops in Australia and Argentina wheat crops may force Asian buyers to look either to the US or the EU to ensure supplies. This has added to the positive sentiment.
In summary, the global market has moved higher, although in recent days prices have held steady. Bulls need to be constantly fed and the recent rally has left the market open to bouts of profit taking that could see a retracement.
David Woodland, ADM Agriculture
Modest UK wheat gains - UK to be a net wheat importer in 2020?
Old crop wheat prices are trading about £1/tonne higher on the week, taking strength from gains offshore. This is despite a stronger pound week-on-week. Grains continue to flow to the ports, although how much of the previous sales to the continent already made will actually get delivered is still in doubt. European brokers continue to report that some sales have been redirected to suppliers on the continent, as UK exporters struggle with logistics.
For new crop, concerns are intensifying over the delays to winter plantings. The issue is almost nationwide and the forecast for the week ahead still looks unhelpful for most. While questions about the eventual area sown to wheat are at the forefront of attention, yield potential is starting to be under threat, too. It is becoming more and more likely that the UK could again revert to being a net importer again next season. This would require UK wheat prices to be attractively priced compared to continental prices, to encourage imports. Currently the new crop LIFFE wheat spread with MATIF is trading at £11/t. This may need to narrow over time.
Rupert Somerscales, ODA
Oilseed markets continue to chase news stories
The latest announcement from China announcing 10 million tonnes of tariff-free quota for US soybeans – for use by end-March – kept the market initially on its toes. The question is, will it be used for new purchases or allocated against old sales? Either way there currently seems to be little evidence of a rush to buy more US beans.
EU Matif rapeseed prices in US dollars terms seem to have stagnated while CBOT beans have been increasing in value since early September. The price spread is now back towards $77/tonne, having reached a high in excess of $105/tonne at the end of August.
The uncertainty of cold US weather on its soybean crop, along with continued heat on the Australian canola crop, will mean the market has much still to digest. When this is coupled with early oilseed rape planting indications in the EU, consumers and growers alike will struggle to identify elasticity of demand for certain oil crop types and at what point the global demand for oilseed crops rations or continues to expand.
Cecilia Pryce, Openfield Agriculture