Northern Ireland Weekly Market Report

12 January 2021
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12 January 2021

Grains

Wheat

Wheat markets are being buoyed by the rally in maize markets. Wheat markets are well supplied in 2020/21, markets will begin to turn their attention to 2021/22 prospects.

Maize

Maize markets are continuing their recent gains. The key drivers are continuing concern about dryness in South America and Argentine maize export restrictions, as well as strong import demand from China.

Barley

Barley continues to be supported by rallying global grains. However, the discount to wheat is increasing in order to keep finding animal feed demand.

Global markets

Global grain markets continued their rally last week, with Chicago maize reaching a near 6-year high. This was maize’s fifth consecutive week of gains. Despite closing at $4.96/bu on Friday, the May-21 Chicago maize contract traded above the psychological $5/bushel mark on Wednesday. However, it is thought that gains were capped by forecast rains in South America, as well slower than expected US exports last week. Slower sales figures would suggest that demand may be beginning to wane at these high prices.

Chicago wheat also hit a 6-year high last week, mainly due to from support from maize and soyabeans. Prices lost some support towards the end of the week, with the May-21 contract closing up just $0.46/t from 31 December to 08 January.

Argentina has now lifted the maize export ban that was due to be in place until 28 February, due to Argentine farmers’ threats to strike. Instead this ban has been replaced with a temporary 30Kt daily cap on sales abroad, in an effort to keep more maize in the country to feed livestock and therefore, keep domestic food prices lower.

The Buenos Aires Grains Exchange increased its forecast wheat production in Argentina up by 0.2Mt to 17.0Mt. This is due to yields in southern parts of the Pampas grains belt averaging 0.5-1.0t/ha above previous estimates. The crop is still well below last year’s production of 19.5Mt.

Chinese maize futures hit contract highs across the board last week and are now trading at their highest levels ever recorded. If sustained, high prices could support future maize imports.

UK focus

On Wednesday, the UK feed wheat futures nearby contract closed at £202.40/t, the highest point since March 2013. The 2012/13 season was another following an exceedingly wet autumn drilling, leading to high UK grain imports that season.

New crop wheat futures (Nov-21) are also holding firm, increasing by £3.50/t from 31 December to Friday’s close at £167.00/t. For this time in the season, new crop futures are currently at the highest point since January 2013.

According to AHDB’s delivered cereals price survey, spot feed wheat prices delivered into the Avonrange area increased by £8.00/t between 17 December and 07 January. Over the same time period, feed barley (spot, delivered Avonrange) firmed by £7.50/t. This shows the support for global grains is lifting not only our domestic wheat price, but also lending support to domestic feed barley prices as well.

Oilseeds

Rapeseed

With the global oilseed market firm, the tightness in rapeseed markets this season and support in oil markets is pushing rapeseed values higher.

Soyabeans

A tight global market and dryness concerns mean the value of soyabeans continue to look firm. Weather will be a key watch for soyabeans in the coming weeks.

Global markets

Despite taking a break midweek, last week Chicago soyabean futures continued to move higher. The nearby contract closed on Friday at $505.45/t, the highest level since July 2014. A tight global supply and demand picture and continued South American crop concerns are key drivers.

Another key driver of strength in oilseeds has been the dry weather faced in South America.

This is challenging soyabean yields. Last week Buenos Aires Grain Exchange estimated that 17% of the soya crop was in “poor” or “very poor” condition, compared to just 7% in the previous week.

Rainfall is expected to improve in Argentina and Brazil in the coming week, however, forecasts beyond that show a return to drier conditions.

Further to this, early soyabean yields have reportedly been disappointing in the Brazilian region of Mato Grosso. Yields in the region are estimated to be 10% down on expectations.

Chinese buying is also a key supporting factor for soyabean prices this season. The total commitment of US soyabean sales to China for 2020/21 now stands at 32.8Mt versus 11.1Mt in 2019/20 (week ending 31 Dec).

A further supporting factor for oilseed prices has been tightness in palm oil markets. Year-end stocks of palm oil in Malaysia were 1.26Mt, down considerably from 2.01Mt a year earlier. Palm oil values have subsequently fallen back on expectations of recovering stocks in 2021. Malaysian imports of palm oil reached record levels in December. Meanwhile, Malaysian exports have so far been slow in January.

This week is a key one for information. New estimates of Brazilian cereal and oilseed production are due on Wednesday, and USDA supply and demand estimates due later today.

Rapeseed focus

Paris rapeseed futures continue to track wider trends in global oilseed markets. The May-21 rapeseed contract closed up €17.75/t last week, closing at €429.75/t on Friday. Domestic rapeseed values followed suit.

UK delivered rapeseed (Feb, Erith) was quoted on 8 January at £396.00/t, up £16.00/t from the previous quote of £380.00/t on 18 December. The global oilseed market remain tight and oil values have risen in recent weeks.

The value of nearby Brent Crude oil futures at the close on Friday was the highest level since 24 February last year.

The recent rise in crude oil values has seen them rally above pandemic affected levels.

The latest Daily and Weekly futures settlement prices reports are now available on the website.

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