Northern Ireland weekly market report

27 September 2021

Grains

Wheat - Global supply concerns met by strong demand continues to support prices. Further southern hemisphere production news is now needed to assess whether global supply and demand tightness may ease.

Maize - US harvest pressures prices, but size and quality of northern hemisphere harvest is not yet confirmed. Potential retroactive US biofuel blending requirement reductions for 2020 and 2021, weigh on forward maize demand.

Barley - Global wheat concerns support barley pricing, though animal feed demand is forecast to remain strong should the discount to wheat remain. Competitive pricing against global maize continues to be watched.

Global markets - Global wheat contracts climbed for the second week in a row. Chicago (Dec-21) gained $5.52/t last week, to close on Friday at $265.91/t.

Last week, global wheat prices gained from supply concerns. Futures rose on concern Russia (a major global wheat exporter) may raise their export tax further, trimming global availability.

Strong global wheat demand has also been supporting prices. Feed wheat tenders reported on Wednesday totalled 984Kt issued by Jordan, Pakistan, and the Philippines. Today, the United Nations issued an international tender for 200Kt of milling wheat for the Ethiopian government. China too is purchasing 2021/22 wheat, opting for Australian origin despite trade friction.

Chicago maize (Dec-21) was relatively unchanged on the week, despite price fluctuation.

US harvest pressure continues to weigh on prices. The market is awaiting information on both the quantity and quality of the US crop. Weather maps show some rain at the start of October, which could delay harvest/impact on quality if realised. As up to 19 September, US maize harvest was at 10%.

News on reducing US biofuel blending requirements weighed on maize futures last week. Refinitiv broke the news Wednesday night. Although not yet confirmed, if realised, this could reduce demand.

The International Grains Council (IGC) boosted their 2021/22 global maize production forecast by 7Mt to 1,209Mt. This was driven by improved US and Ukraine outlooks. Early yield estimates of 4% harvested look below expectations for Ukrainian maize. Yields are pegged at 1.96t/acre (below expectations of 2.92t/acre), something to watch but not a large concern yet.

Preventing futures losses too, France is experiencing harvest delays due to heavy rain in the southwest. On 20 September the maize harvest was 1% complete, compared to 15% this time last year.

UK focus - UK feed wheat futures (Nov-21) gained £3.70/t last week, quoted on Friday at £194.00/t.

UK feed wheat prices (delivered) followed futures gains. Into East Anglia (Nov-21), delivered prices rose £3.50/t to £193.00/t (Thurs-Thurs). Feed barley delivered East Anglia (Nov-21) was quoted at £178.50/t, a discount of £14.50/t to wheat.

For bread wheat, Northamptonshire (Nov-21) was up £7.00/t, quoted at £232.00/t on Thursday.

The final 2020/21 cereals supply and demand estimates were released last Thursday. Commercial ending stocks as we entered 2021/22 season, look tight for both wheat and barley.

Where now for wheat in 2021/22? The UK wheat crop looks as though it could reach 14.5Mt, though demand could stay strong for feed grains and milling wheat quality remains a concern.

With tight global supply of milling wheat too, UK milling premiums are ahead of this time last year.

The last AHDB GB harvest report is due on Friday (1 Oct).

Oilseeds

Rapeseed - Fundamentals still support rapeseed prices from a reduced Canadian crop and a tight outlook in Europe. The direction of soyabeans in the coming months with South American plantings could drive oilseed rape sentiment.

Soyabeans - The US soyabean harvest has started. With dry weather forecast in the US Midwest, the harvest looks set to progress well. In the coming weeks, the market will look to Brazil as they plant what could be a record crop.

Global markets - Chicago soyabeans (Nov-21) prices were relatively flat week-on-week, gaining just $0.37/t, to close on Friday at $472.11/t.

The market dropped by nearly $8.00/t last Monday but slowly recovered throughout the week.

Currently driving soyabeans markets is the US harvest, which is underway. Last Monday’s USDA progress report pegged the soybeans harvest at 6% complete nationally (as of 19 September). This is in line with the 5-year-average. Drier conditions across the US Midwest over the weekend and at the start of this week will aid progress.

In a latest Refinitiv poll, published last Friday, Brazil is expected to harvest a record 143.75Mt of soyabeans for the 2021/22 marketing year. This is taken from an average of 11 analyst projections and is up 5.8% from 2020/21.

Despite soyabeans being flat across the week, Chicago soya oil and Malaysian palm oil markets found support. Latest data released by AMSpec Agri estimated Malaysian palm oil exports for Sept 1-25 at 1.28Mt, up from 989Kt last month.

Rapeseed focus

Paris rapeseed futures (Nov-21) closed on Friday at €619.50/t, gaining €18.75/t across the week. Delivered rapeseed (Erith, Nov-21) was quoted on Friday at £532.00/t, gaining £12.50/t across the week.

Rapeseed planted area across Europe is anticipated to increase year-on-year in key countries such as France and Germany. The increase is driven by the current high prices.

In France, planted area is set to rise by between 15-20%. If realised this would put the area at 1.12Mha – 1.17Mha hectares, but still below the 2016-2020 average of 1.36Mha (France agriculture ministry).

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