The NI weekly market report
Wheat - While there is some pressure from the exchange rate on US exports, the fundamentals remain supportive. Support is from dryness concerns in Europe and the ongoing challenge to release more wheat from Ukraine.
Maize - In addition to a floor of support due to the Black Sea conflict, dryness across the US Midwest is causing concerns for yield potential.
Barley - Global and domestic balance continues to be tight and it is looking like this will continue into next season.
Global markets - Global wheat markets fell over the course of the last week. Chicago Dec-22 futures ended the week at $389.90/t, back $13.51/t Friday-Friday. US market softening was pegged down to harvest pressure and a firmer dollar, limiting export sales. Additionally, markets saw some short selling ahead of the Juneteenth public holiday (observed today, 20 June), which also added pressure. European markets were largely stand-on on the week, with the Paris Dec-22 contract down €0.75/t Friday to Friday, to end the week at €384.75/t. However, UK (Nov-22) feed wheat futures were up £2.00/t, closing at £308.00/t over the same period, with the weakening pound against both the Euro and the US dollar offering some support.
Nevertheless, underlying support remains across all grain markets due to the Ukraine war. Negotiations are ongoing to try and release more Ukrainian grain out of Odessa, although hope is waning for a resolution. EU leaders are looking towards a revamp of certain rail routes, to release some grain quantities to the Danube in Romania, though this would not immediately resolve the backlog. Currently, Ukraine is aiming to maximise the infrastructure it can use (road, river, and rail) to boost exports, though monthly volumes are expected to be well down on pre-war volumes of up to 6.0Mt, at 2.0Mt.
The current heatwave in France and Spain could exacerbate crop stress caused by the dry spring. The biggest threat is seen in central France, where crops are in their final grain filling stage. Earlier this month, Stratégie Grains had already downgraded their forecasts for the EU-27 wheat crop, pegging it at 124.4Mt. This is down from the 126.2Mt estimated last month. However, impacts have been varied, with localised heavy showers in some regions. Additionally, the heatwave is due to break this week, which could remove some stresses.
Maize markets recorded more support over last week, ending the period at a one month high. Dry weather across the US Midwest is increasing crop prospect concerns, furthering reliance on future rain to replenish soil moisture levels. The Chicago Dec-22 contract closed Friday at $287.79/t, up $4.13/t from the previous Friday.
UK focus - Domestic markets softened on Friday but were up on the week due to gains Monday to Thursday. Nov-22 futures closed Friday at £308.00/t, up £2.00/t on the previous Friday. The May-23 contract tracked this trend, up £3.50/t on the week, closing at £314.75/t over the same period.
Physical prices also recorded a gain on the week. Feed wheat for harvest delivery into East Anglia was quoted at £306.50/t as at Thursday, up £8.00/t on the week. Bread wheat prices into the North West observed the same trend, with November delivery prices up £9.00/t on the week, being offered on Thursday at £377.00/t.
The latest UK trade data up to April, released last week, showed the impacts changes in trade dynamic since the Ukraine war are having on UK grain trade. The data pointed to increased wheat imports, maize imports and barley exports.
Rapeseed - Global tightness keeps prices high in the short-term. Longer-term, with EU harvests coming up and crop conditions looking improved, gains could be capped. However, the outlook remains tight.
Soyabeans - Demand remains strong for US origin soyabeans, keeping prices supported. Forecasts of hot weather will be a watchpoint over the coming weeks as crops emerge.
Global markets - Last week saw both old crop and new crop Chicago soyabean contract losses. The Jul-22 contract was down $15.99/t over the week, closing at $625.31/t on Friday. The Nov-22 contract closed at $564.88/t, a loss of $11.30/t over the same period.
Last week’s USDA weekly crop progress report estimated that 88% of this year’s soybean acreage has been planted in the US, equalling the five-year average for this point in the season. This eases previous concerns that weather conditions would cause lower acreage than expected due to unfavourable planting conditions. Rain was welcomed in parts of the country and is said to have limited yield damage for now. However, price losses were offset slightly by forecasts of hot weather that could trim yields this will remain a watchpoint over the coming week.
The US also reported 100Kt of cancelled soyabean sales for 2021/22, intended for unknown destinations.
In other news, the improvement of rapeseed crops in Ukraine and Australia, as well as the completion of canola (rapeseed) planting in Canada, softened rapeseed prices last week. However, hopes that Ukraine will be able to export significant amounts this harvest is still doubtful and global tightness remains for now. Ongoing negotiations between the West, Ukraine, and Russia in hope of reopening some Odessa export routes are seemingly stagnating.
Rapeseed focus - Paris rapeseed futures (Nov-22) closed at €760.25/t on Friday, down €23.50/t from the previous week.
Domestic prices didn’t follow the continental trend but saw little change. Delivered rapeseed (into Erith, Hvst-22) were quoted at £656.50/t, up £1.00/t from the previous week. Nov-22 and Feb-23 were quoted at £663.50/t and £665.50/t respectively. The softening of sterling against the Euro last week, closing at £1 = €1.1696 on Friday, helped to shield some of the pressure seen on European futures.