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Weekly grain and oilseeds market view from Europe, September 4

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Global markets are in a buoyant mood, with wheat, corn and oilseed futures higher on the week.

 

A weak dollar, rumours of Chinese buying and dryness in the plains all contributed to the highest US wheat prices since April.

 

Farmers remain reluctant sellers across much of the EU and into the Black Sea region.

 

 

What to watch

The final curve ball lies with South American weather – some more water is needed or there could be more oilseed fun and games in the new year.

 

 

UK grain

Gains in offshore markets feed into UK wheat/barley prices

There are many wheat fields yet to be cut either side of the Humber, and few look to be in decent shape, with huge weed infestations adding to the lower yield/quality problems.

 

It is likely that when these fields are cut and yields are included in the national average calculation, then UK production should be moving lower, not higher.

 

Still, global markets are in a buoyant mood, with wheat, maize and oilseed futures a couple of pounds higher on the week.

 

The London November futures contract has taken a look at £170 per tonne a couple of times, as has Paris Matif December at the E190-per-tonne mark.

 

Our wheat prices continue to sit above Matif, to encourage the volume of imports needed this season.

 

It is hard to see why this situation needs to change anytime soon.

 

When local wheat prices are compared to imported maize, both calculate into domestic feed mills at roughly the same level and this will help keep a ceiling on feed wheat prices.

 

Barley values remain in the doldrums, and for good reason - an oversupplied UK and European market with questionable local grain quality.

 

Unless the world’s coarse grains market takes another step higher for whatever reason, or sterling takes a nosedive on Brexit-related news, it is hard to see how barley prices can independently gravitate higher.

 

That said, UK supplies are competitive internationally, so the downside should also be limited.

 

Rupert Somerscales, ODA

 

European grain

EU supply squeeze forces up spot prices

Wheat markets continue to be underpinned by lower EU production and firming global prices.

 

With harvest almost complete, the EU will provide a mixed bag, with output considerably lower year-on-year in France and the UK, slightly down in Germany, but higher in Poland and some eastern EU states.

 

In the UK, unwelcome rains during maturity and the harvest period have created quality problems, meaning a larger percentage of this year’s crop will be of feed quality.

 

Farmers remain reluctant sellers across much of the EU and into the Black Sea region, which is providing a supply squeeze, forcing up spot prices, especially in Russia where exporters look to cover supplies against a heavy early season export programme.

 

Adding support to the wheat markets are rising maize prices, due to declining crop prospects in the US, Ukraine and eastern EU states.

 

The EU Commission cut its import tariff to zero on imported maize, with imports up to August 30 running 30% lower on the year.

 

Current market conditions are likely to continue to support prices in the short term.

 

However, a record global wheat crop, slow import demand and adequate global supplies will provide resistance to a marked price hike, especially given the recent surge in the euro/dollar exchange rate.

 

David Woodland, ADM Agriculture

 

Oilseeds market

Uncertainty surrounds EU rapeseed crop sizes

With uncertainty around EU rapeseed crop sizes there are still many watching the weekly non-EU rapeseed figures.

 

The UK has already seen more than 60,000 tonnes arrive since the start of July and this is only likely to get bigger and be matched with EU imports as well.

 

The crop size uncertainty is also matched by China’s continued buying of soybeans.

 

The US has been the main seller which when matched with the current weakness of the US dollar puts Chicago soybeans in a positive trajectory.

 

Matif rapeseed has tried to match this but, in fact, the net outcome has been a decrease in Matif rapeseed and Chicago soybean spreads from the peak in early August.

 

All eyes will now be on the Canadian final canola crop number – Stats Can published an 18.8m-tonne number, some 1.22% larger than last year’s, but the reality is, unless Australia pulls in a big canola crop the global supply will remain tight for another year.

 

The final curve ball lies with South American weather – some more water is needed or there could be more oilseed fun and games in the new year.

 

Cecilia Pryce, Openfield

 

Organic arable

Values badly affected by cheap imports from Black Sea and Baltic origins

A frustrating harvest for many organic farmers, especially those further west, but with the better weather this week it is hoped most will complete their combining.

 

It is too early to say how the wet weather since mid-August has affected quality and it will largely depend on how ripe crops were when the wet weather came.

 

There were lots of reports of uneven ripening and of oats shedding with some farmers estimating this at 0.75–1 tonne per hectare.

 

Samples through the lab to date show reasonable quality with bushel weights good.

 

One slight surprise is nitrogen is higher on malting barley than anticipated.

 

Usually plenty of samples are 1.4% – 1.6% nitrogen, but this season we have seen plenty over 1.6%.

 

This will hopefully boost some demand for barley as this equated to protein at over 11.5%.

 

Values have been badly affected by cheap imports coming available from both Black Sea and Baltic origins which is pushing feed wheat down to £212 per tonne ex-farm, with barley back a further £5 per tonne.

 

A French contact indicated the offer of non-EU origin organic wheat into France was priced at equivalent to £270 per tonne delivered mill - so about a £40 per tonne premium over the UK offer - but joked that French buyers are harder to please than those in the UK.

 

The bean harvest is poor.

 

Imported pea values are reported at £330 per tonne delivered and so bean values are likely to come under pressure.

 

Winter seed is in tight supply and so it is recommended that farmers order sooner rather than later to avoid disappointment.

 

Andrew Trump, Organic Arable

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