In Europe, lack of demand has undercut grain prices, with competitively priced Black Sea, US and Argentinian wheat adding more pressure.
Vivergo’s plans to bring forward annual maintenance and close its plant in Hull could put UK farmers’ basis levels under pressure.
And oilseeds markets remain volatile and uncertain.
What to watch
Global market direction is now watching weather conditions in South America and Australia.
May 18 LIFFE wheat futures closed on Thursday, November 14 at £144.75 a tonne, a drop of £1.45 a tonne on the week.
Focus on import parity
This week, another £2 a tonne was extracted by the market.
The pound has continued to weaken against the euro which has provided some price support, but other factors have conspired against domestic grain values.
National traders have highlighted the ample coverage by consumers for pre-Christmas position as well as repeating ad nauseam the mistaken narrative of abundant world wheat supplies.
However, data last week from farm ministry Defra showed domestic demand was above the same period last season, when it was at a record level.
The UK farmer has also sold around 25% less wheat than at the same time last year, according to the corn returns.
The news-elephant in the room is the announcement that Vivergo, the ethanol plant at Hull, northern England, is to bring forward its annual maintenance programme and close its plant.
It cites a difficult trading environment and political uncertainty regarding the future of E10 petrol in the UK.
But this will likely put farmers’ basis levels under pressure.
The wheat balance sheet is very tight this season, requiring multiple imports of wheat, despite the Vivergo closure, with the UK needing to import around 1m tonnes.
The price is therefore focusing on import parity and not being export competitive.
Rupert Somerscales, ODA
Lack of demand undercuts European grain values
Since our last report a few weeks ago, the European market has fallen €3 a tonne, as weak global fundamentals weigh on values.
A general lack of demand for European Union supplies, and competitively priced Black Sea, US and Argentinian wheat continues to undercut EU values.
Exports for the season to-date remain sluggish. Soft wheat exports are reported at just 7.63m tonnes as of November 7, down 25% year-on-year.
Aggressively priced Russian wheat continues to monopolise Egyptian tenders, and with no French offers witnessed over the past few, and the likelihood that Romania will also soon stop offering, it appears Russia can pencil in the remainder of this year’s Egyptian trade.
The French Ministry on Wednesday trimmed French soft wheat production to 37.5m tonnes, from a previous level of 37.9m tonnes, but demand and not supply was the real issue overhanging the EU.
Current export pace translates into a yearly projection some 4m-5m tonnes below the current US Department of Agriculture forecast for 2017-18.
Good domestic harvests in Africa have reduced requirements for imports and a poor-quality harvest in Germany has substantially reduced export potential.
All in all, the EU export outlook remains bleak, and not helped by the recent drop in the value of the US dollar to a three-month low.
David Woodland, Gleadell
Oilseeds markets remain volatile
Having seen a reasonable rally in Matif levels in the first nine days of the month, the correction ever since has been down, eroding all gains.
The EU market is stuck worrying about availability of inputs for the rest of the season and the substitution which may take place between oil and meal types.
With more than 1.4m tonnes of rapeseed imported since the start of July, 1.1m tonnes from Ukraine, there was still another nominal 3m tonnes to source, and there lies the uncertainty.
The EU has got a reasonable crop of its own this year and intra-EU shipments are developing an interesting pattern, with UK imports from the EU at levels not seen before.
This, plus discussion around “planting issues” for the 2018 harvest, will also add to the nervousness.
Brazil’s weather will keep the trade occupied for another few months, as will US usage data.
It certainly looks like domestic consumption numbers of many commodities may be worth monitoring closely this season, rather than worrying too much about the crop number.
Cecilia Pryce, Openfield