Northern Ireland weekly market report - 27 February 2023

Northern Ireland weekly market report - 27 February 2023
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27 February 2023

Grains

Wheat

Northern Ireland weekly market report - 27 February 2023Northern Ireland weekly market report - 27 February 2023
Northern Ireland weekly market report - 27 February 2023

Short term volatility is expected as the Ukrainian grain export corridor renewal date nears.

An extension is anticipated, though the outcome of talks will be crucial for the short and long-term price direction. Currently, cheap and plentiful Russian supplies continue to pressure the market.

Maize

Argentinian crop concerns lend some support to markets short term, though demand too is crucial. Longer term, a large Brazilian crop is due, and a large US crop is forecast for 2023/24.

Barley

Barley prices continue to follow the wider grains complex.

Global markets

Last week saw considerable pressure across the board for global grains, especially for old-crop prices.

Chicago wheat and Paris wheat markets (May-23) fell 7% and 4% respectively last week, pressured by competitive Russian wheat picking up global demand and optimism for an extension of the Black Sea Initiative (Ukrainian export corridor). US markets were closed on Monday for a public holiday, but later in the week saw added pressure from a strengthening US dollar.

Last week, Egypt’s state buyer GASC purchased 240Kt of Russian wheat for shipment 1-15 April.

The lowest offer was $317.50/t (cost and freight), with most expensive origin offered being French ($341.90/t).

Eyes will be on Turkey’s state grain board TMO tender for 790Kt milling wheat, in which the deadline for submission is due tomorrow (28 Feb).

Volatility is still expected in wheat markets short term, as we rapidly approach the 19 March deadline for the Black Sea Initiative renewal. Ukraine is reportedly asking the UN and Turkey to start talks with Russia, with Ukraine looking to extend the deal for at least one year and to include the ports of Mykolaiv.

It is understood markets anticipate a renewal of the initiative, as the most likely scenario. Though the detail will be important. How long is it extended for? Extra ports included? Vessel inspection to be sped up?

The USDA released their 2023/24 US crop outlooks, projecting increased US area for wheat and maize for harvest 2023, up 8% and 3% year-on-year respectively. For maize, if realised, this crop could be the second largest US crop on record. New crop grain forecasts and conditions will be key to longer term price direction for grains.

Chicago maize futures (May-23) fell 4% last week (Friday to Friday), and new-crop futures (Dec-23) fell 3% over the same period. Conditions of the Argentinian crop remain key for short term price direction, as well as demand, with slower US ethanol demand expected as US ethanol stocks rise in the latest data. Longer term, larger US supplies are due for 2023/24.

Despite the overall price falls last week, the Buenos Aires Grain Exchange trimmed the 2022/23 maize production estimate down 3.5Mt, to 41Mt. The impact of dry weather on late plantings is still being assessed, though arguably the news was already factored into prices.

UK focus

UK feed wheat futures (May-23) fell £14.25/t last week, to close on Friday at £227.00/t. This followed global grain markets, particularly European market movements. New-crop futures (Nov-23) saw less pressure on the week, falling £5.90/t over the same period to close on Friday at £231.00/t. Moving new-crop prices to a premium to old-crop.

Domestic delivered prices followed futures movements (Thursday to Thursday). Feed wheat delivered into East Anglia (Mar-23 delivery) lost £7.00/t last week, quoted on Thursday at £232.00/t.

Bread wheat delivered into the North West (Mar-23 delivery) fell £8.50/t last week, to be quoted on Thursday at £310.50/t. New-crop bread wheat into the North West (Nov-23 delivery) was quoted on Thursday at £315.00/t, £81.00/t over the UK feed wheat (Nov-23) futures close on the same day.

Oilseeds

Rapeseed

Short-term prices are being supported by the soyabean market. Longer-term the EU crop is faring well, and European ending stocks are going to increase, giving potential for the price to move down.

Soyabeans

Much of the drought-hit Argentina has been priced into the market. Longer-term there is a record Brazilian crop expected with harvest on-going.

Global markets

Chicago soyabean futures (May-23) ended down 0.2% across the week to close Friday at $558.17/t. The contract closed at its highest point since June 2022 on Tuesday (21 Feb), from concerns of Argentinian weather and after a long US weekend. However, there was pressure on prices throughout the week as a lack of “new” news was unable to sustain these high prices.

A limited forecast of rain in Argentina caused price support at the start of the week. On Thursday Buenos Aires Grain Exchange slashed their soyabean crop estimate from 38Mt to 33.5Mt in one hit. Markets didn’t react much as it was expected, and a lot of the drought (for the moment) has been priced into the market.

In other news, last week the USDA at their Agricultural Outlook Forum estimated that for 2023/24 US soyabean usage, supply and exports will be higher, but so will end-season stocks. The area planted to soyabeans for 2023/24 is projected at 35.41Mha. Soyabean production is pegged at 122.74Mt, which is broadly in line with the pre report poll average estimate of 122.88Mt and if realised, would be the biggest US crop on record. Read more on this outlook here.

Malaysian palm oil prices (May-23) have been supported broadly since the start of February. This is over concerns over a tighter global supply and improving demand from India and China. Supply is currently tighter due to Indonesia’s export policies, and floods in western Indonesia and Malaysian palm oil regions, some crop damage is expected.

Rapeseed focus

Rapeseed prices felt pressure last week from soyabeans, as well as pressure from the Australian canola harvest coming to the export market. Paris rapeseed futures (May-23) closed Friday at €542.00/t, down €22.50/t across the week. Domestic rapeseed (into Erith, Mar-23) was quoted at £472.00/t on Friday, down £13.00/t across the week.

Stratégie Grains in their latest oilseed report have revised up their EU-27 rapeseed crop forecast for harvest 2023 to 19.6Mt, from 19.5Mt previously. Rapeseed plants are reported in satisfactory conditions, though some rain is needed in parts of western Europe.