Northern Ireland weekly market report

15 November 2021

Grains

The dials in this report reflect the analyst’s view of the possible direction in markets. The two-week (solid line) and six-month (dashed line) outlooks are based on the best available information at the time of writing. Please note, these views do not constitute trading advice and direction of markets may change due to new information since the time of writing.

Wheat

Global supply and demand remains tight, supporting prices short term. Longer term, further Russian export curbs, export pace, as well as 2022 crop conditions are areas to watch.

Maize

Short term support is expected across the feed grain complex. Longer term, bigger ending stocks are expected providing the arrival of large South American crops.

Barley

Barley markets continue to track wheat gains. The narrowing discount of barley to wheat suggests a tight UK supply and demand picture.

Global markets

Another week of gains for global wheat contracts, with supply and demand tightly balanced. Paris milling wheat (Nearby, €) has been reaching record prices, since contract data from 1999.

The latest world agricultural supply and demand estimates (WASDE) released on Tuesday intensified global wheat availability concerns. Reduced global supplies (-1.0Mt to 1,063.2Mt), increased consumption estimates (+0.4Mt to 787.2Mt), and higher forecasted exports (+3.5Mt to record 203.2Mt) have pushed global ending stocks lower (-1.4Mt to 275.8Mt). Forecasted exports were up, primarily on increases from India, the EU, Russia, and Ukraine.

The Russian Agriculture Minister said last week the formula on how grain export taxes are calculated may be changed should prices reach $400/t. They also stated an export quota is likely to be introduced from mid-February 2022 until the end of June 2022. More details are expected next month.

Rain in Queensland, northern New South Wales and northern Western Australia reportedly delayed harvesting and summer crop planting last week, causing some quality concerns. Weather maps show a drier start to this week, though some rains are forecast at the end for areas of Western Australia and New South Wales. The availability of the Australian crop globally will depend on freight readiness.

Chicago maize (May-22) increased $8.46/t last week, gaining with wheat contracts, to close on Friday at $231.79/t.

The latest WASDE report increased US yields, boosting US production estimates 1.1Mt to 382.59Mt. Globally, with increased beginning stocks (primarily in Brazil) and increased production, 2021/22 ending stocks were raised 2.68Mt to 304.42Mt. However, we did see US demand in maize used for ethanol rise 1.27Mt to 133.35Mt, tightening the US supply and picture.

Recent Argentinian rains have reportedly added soil moisture to newly sown maize fields. As at Thursday 11 November, planting in Argentina was 29% complete. Harvest is forecasted at 55Mt.

A point to watch are Chinese maize prices, which have been rising to multi-month highs for 2021/22 on wet weather delaying logistics and high drying costs. Something to watch going forward.

UK focus

UK feed wheat futures (May-22) climbed £7.40/t last week, to close on Friday at £229.40/t.

For UK delivered prices, feed wheat delivered into East Anglia (Dec-21) was up £3.50/t to £224.00/t. Feed barley delivered into Avonmouth (Dec-21) was up £4.00/t to £214.50/t, discounting feed wheat by £10.50/t into the same destination.

Bread wheat prices saw yet another week of gains. North West bread wheat (Feb-22) gained another £5.00/t, averaging £292.50/t. This is perhaps unsurprising, with Paris milling wheat futures climbing and the tight UK supply of group 1 milling wheat.

September trade data is now available. Total wheat imports for 2021/22 season to date (Jul-Sept) are now at 626.92Kt including durum, down 16% from same period last year.

Oilseeds

Rapeseed

Fundamental support in soyabeans continues the rapeseed price ascent. The Australian crop is starting to come online, but still not enough to fulfil deficit. Longer-term price hikes could incentivise area increases for 2022/23.

Soyabeans

Marginal support across the week for soyabeans, with the USDA report cutting global ending stocks. Longer-term, large South American crops are expected to come to market from January, with no major weather event currently impacting this.

Global markets

A week of support for oilseeds as Chicago soyabeans (May-22) were up over 3% across the week.

Starting the weekly support was the USDA report, released last Tuesday (09 Nov). In the report, US soyabean yields were reduced beyond trade expectations, with production revised down 0.63Mt, to 120.43Mt. Further, Argentina production was revised down 1.50Mt, to 49.50Mt. All this meant that world ending stocks were pegged below market expectations, reducing to 103.78Mt. Further insight into this report can be read here.

An uptick in demand for high-protein feed ingredients and labour shortages and haulage issues further exacerbated gains (Refinitiv). This leant support to the nearby Chicago soyameal contract, gaining 8.8% across the week.

In further news, 256.93Kt of US soyabeans were booked on 12 November to an unknown destination, this further reinforced prices.

After a week of volatility, Malaysian palm oil futures (Jan-22) gained 1.13% across the week. Exports of palm oil products for November 1-15 rose 26.6% to 882.39Kt, up from 696.81Kt shipped in the same period in October (Cargo Surveyor, Intertek Testing Services).

Despite support for vegetable oils, nearby brent crude oil was down 0.69% across the week. Prices are pressured currently from expectations of higher supplies and weakening demand. The nearby contract has traded down to $81.18/barrel this morning (10:00, GMT).

Rapeseed focus

Gains in soyabeans has added the continuous bullish spur into rapeseed. Paris rapeseed futures (May-22) closed Friday at €681.25/t, gaining €17.25/t across the week.

Delivered rapeseed (into Erith, Dec-21) was quoted at £609.50/t on Friday, gaining £11.00/t across the week. Harvest-22 for Erith was quoted at £499.00/t, down £1.00/t across the week.

Gains on our 2021/22 domestic market were limited as sterling strengthened (+0.46%) against the Euro to close Friday at £1 = €1.1724.