Northern Ireland Weekly Market Report
Wheat - While export demand has remained relatively strong, South American weather concerns appear to already be factored into markets going forward.
Maize - There’s underlying support from continued Chinese buying but unless there’s new South American weather news, markets may start to drift.
Barley - While domestic feed barley demand is expected to remain firm, demand by maltsters is subdued due to the loss of out of home consumption.
Global markets - May-21 Chicago wheat futures gained $2.57/t Friday to Friday due to strong export demand, closing at $223.84/t on 27 November. Chicago maize futures (May-21) were up on the week for the fourth week running, gaining $2.36/t to close at $171.95/t. May-21 Paris milling wheat futures also increased week on week by €1.00/t, closing at €208.25/t on Friday.
Markets moved sideways in the middle of last week due to no new news and Thanksgiving. However, strong US export demand for wheat drove a rise in prices on Friday. US wheat export sales for week ending 19 November were 795.7Kt, well above trade expectations of between 200Kt to 450Kt (Refinitiv).
Strong Chinese buying was a theme again last week, which has reportedly been supporting European wheat prices. Despite the EU having a smaller wheat crop this year, the effects of COVID-19 on demand is thought to have added to the exportable surplus. EU common wheat exports are 20% behind the same period last year but this gap could shrink if the recent sales that have been reported, especially to China, are actually shipped.
Dry conditions in Brazil have led to the yield estimate for the first maize crop of the season being cut by the consultants Safras & Mercado. The company now have the first Brazilian maize crop pegged 18% lower than 2019/20 levels at 19.1Mt. Earlier this month, Conab pegged the first maize crop at 26.4Mt.
May-21 UK feed wheat closed at £194.50/t on Friday, up £1.50/t on the week. The Nov-21 contract also recorded a week on week increase (£1.20/t) to close at £161.20/t.
On Friday the results of the latest Early Bird Survey (EBS) were released. These estimates provide a first look into UK cropping intentions for harvest 2021. With better conditions this autumn compared with last, planting intentions have shifted back to more typical winter cropping.
All winter cereal crops are expected to record a rise in area planted for 2021. The wheat area is estimated to increase by 28.3% on the year to 1.815Mha, while winter barley plantings are projected to rise by 24% to 394Kha.
The first official 2020/21 UK cereal supply and demand estimates were released on Thursday. The wheat supply and demand balance is set to be the tightest in over 20 years due to a significant fall in total availability. Typically, when the estimated operating stock requirement is taken away from the balance, a surplus is available for either export or free stock. However, with the wheat balance on a knife edge, a deficit has been identified, due to many factors. These include, but are not limited to, changes in demand later in the season, accuracy of official data and uncertainty around the future of trade after the Brexit transition period.
In the latest balance sheet release, the barley balance remains above the five-year average, with a rise in supply outweighing an increase in usage. Maize imports are expected to remain strong on the back of increased human and industrial demand. Meanwhile, oat exports are forecast to be high once again this season due to another bumper crop.
Rapeseed - Paris rapeseed futures (May-21) appear to have reached a technical ceiling in recent weeks, which may limit further movement in the shorter-term. However, rapeseed prices remain fundamentally supported because of tight supplies.
Soyabeans - Rain across South America improved planting progression. However, dryness is a key watch point over the next few months as this could hinder soyabean yields. Chinese purchasing will also be a focus.
Global markets - Despite a short trading week and an element of profit taking, Chicago soyabean futures (May-21) closed Friday at $437.57/t, gaining $4.22/t across the week.
Weather concerns in South America dominated the oilseed complex last week. As a result, Chicago soyabeans could record their largest monthly gain since 2016, in November.
On-going concerns in Brazil and Argentina are the key focus for the supply of soyabeans entering 2021. Recent rains in Argentina improved water supplies and brought relief in the Cordoba and Western Buenos Aires regions.
However, there are still pockets of dryness and if this is pro-longed, it will hinder yields. Brazil’s Ag Resource Company Mercosul has already revised down their soyabean forecast down to 128.34Mt, down from 129.15Mt in their previous report.
After a 5-month purchasing spree there are signs that Chinese demand may be starting to curb. It seems that some small importers and processors are looking to cancel U.S. cargoes for December and January shipment. The rally in Chicago soyabeans means that crush margins have reduced.
Weekly export sales of soyabeans from the US have reduced. Sales last week were down to 768.1Kt, the lowest weekly amount the marketing year started on 1 October, according to the USDA.
Paris rapeseed futures (May-21) closed Friday at €408.25/t, down €3.25/t across the week, despite gains in soyabean and Brent crude oil (+7.1%). Rapeseed futures were unable to gain due to technical resistance and the euro strengthening against the US dollar.
UK delivered rapeseed (into Erith, Dec-20) shadowed the futures loss and was quoted at £370.50/t on Friday, down £5.00/t from the week before. Domestic trade was reported to be thin on the week.
The AHDB Early Bird Survey, released on Friday, showed intentions for rapeseed planting were down 18.1% from 2020. Based on the provisional 2020 area, the intended area for harvest 2021 is 318Kha; the lowest area since 1986. Anxieties around the risks, economic feasibility and pest prevalence of this break crop have been cited as particular challenges.