The NI weekly market report

11 July 2022
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Grains

Wheat - Harvest pressure remains in the short term but longer term the fundamentals remain supportive with a tight global supply outlook.

Maize - While US production is looking more optimistic in the short term with higher-than-expected acreage, global supply will remain tight in the long term.

Barley - Global and domestic demand remain strong and prices continue to follow the sentiment of international grain markets.

Global markets - After some pressure at the beginning of the week resulting in Chicago wheat futures being at a four-month low, global wheat markets had regained some support by Friday. Chicago (Dec-22) wheat futures gained $16.17/t Friday-Friday, closing at $333.05/t.

Global maize prices were also up across the week, recovering from trading at a seven-month low last week. Chicago maize futures (Dec-22) closed at $245.47/t on Friday, up $6.30/t across the week.

Global recession fears have eased slightly and global tightness seems to have reasserted itself into the market. There are concerns surrounding the Argentinian wheat crop according to Buenos Aires Grain Exchange, as unfavourable weather conditions looked to have reduced plantings.

Temperatures across Europe are looking abnormally hot over the next week for this time of year and the dry weather is putting wheat crop yields at risk of a downgrade, adding further support to markets.

For US maize, while acreage is estimated down 4% from 2021, production is looking more optimistic than expected. Trade estimates ahead of tomorrow’s WASDE report are up slightly from June’s figures. The average estimate of maize production is 368.8Mt, up 1.5Mt from the 367.3Mt predicted in the June WASDE report. If as predicted, we could see some limited easing of tightness on global maize markets.

Supply concerns are keeping global barley prices high. In particular the dry weather in France has built doubt over the size of harvest as yields are likely to have been compromised. It will be interesting to see how harvest estimates progress, with only limited rains forecast in Europe over the coming week.

UK focus - Although volatility from the global market fed into the domestic market, strong demand combined with easing recessional fears increased prices week-on-week.

UK feed wheat futures (Nov-22) closed at £285/t, gaining £19/t Friday to Friday. The May-23 contract closed at £290.75/t gaining £18.35/t over the same period. Nov-23 prices captured some gains too, closing at £247.75/t, up £14.35/t Friday to Friday.

Prices reported in the AHDB delivered survey were sparse. However, delivered feed wheat (into East Anglia, Hvst-22) was quoted at £263/t, down £6.50/t Thursday to Thursday and shadowing UK feed wheat futures (Nov-22), which was down £7.80/t over this period.

In other domestic news, AHDB has released the latest Planting & Variety Survey with the UK wheat area for harvest 2022 estimated at 1,807Kha, 1% up from 2021. Total UK barley area is estimated at 1,103Kha, down 4% on the year. Based purely on five-year averages, this puts both these crops potentially at circa 14.4Mt and 6.8Mt, respectively. Further insight can be found in Meg’s Grain Market Daily: What can we expect from harvest 22?

Oilseeds

Rapeseed - Rapeseed prices have tracked higher in the short term amid reduced planting projections in Canada but long-term prices are likely to continue to be more influenced by other oilseeds in the 2022/23 marketing year.

Soyabeans - Easing of recessional concerns have supported soyabeans slightly in the short term. US weather is currently in focus as the crop enters key development stages. Long-term focus will be on South American planting intentions and whether high input prices could potentially reduce acreage.

Global markets - Global oilseed markets edged higher at the close of last week, with Chicago (Nov-22) soyabean futures settling at $513.07/t, up by $0.46/t Friday-Friday. Gains were supported by easing recessionary concerns and technical buying following recent price lows, helping to support the market.

Traders are anticipating slight downward revisions to US new crop (2022/23) soyabean production in tomorrow’s WASDE report. The USDA is now estimating production at 123.34Mt, down from 126.28Mt projected in June amid drier weather conditions. Meanwhile South American soyabean output for the 2021/22 marketing year is also expected to turn marginally lower due to previous dry weather.

Malaysian palm oil futures (Oct-22) have lost 10.50% of their value across the week and closed at MYR4,194/t (Malaysian Ringgit) on Friday amid ongoing demand pressures. This is despite some uplift at the end of the week in line with the wider vegetable oil complex.

Exports of palm oil from Malaysia have fallen by 20.5% between 1 – 10 July, with just 330.3Kt shipped, from 415.3Kt the same time last month. This on-month reduction reflects sharp falls in deliveries to China as they focus on drawing down domestic reserves.

Moreover, shipments from Indonesia could pick up further. This comes as Indonesia’s trade ministry is currently considering lowering its levy on palm oil exports in response to excess domestic stocks and depressed local palm fruit prices.

Looking forward we are currently in the US weather market. This week across parts of the US Midwest there is forecast to be warmer weather and pockets of rains are forecast.

Rapeseed focus - Paris rapeseed futures (Nov-22) closed Friday at €695.50/t, gaining €22.50/t across the week. Delivered rapeseed (into Erith, Feb-23) was quoted Friday at £602.50/t, with no comparison week-on-week.

Despite the soyabean market tracking sideways and the palm and soya oil market pressured, rapeseed futures climbed week-on-week. Adding support to rapeseed was data from Statistics Canada which pegged canola plantings for harvest 2022 at 8.7Mha, down 430Kha year-on-year. Also, ICE Canola futures rose as crushers covered short positions and there was spill-over strength from soya oil towards the end of last week, adding further support.

Domestically, the Planting & Variety Survey pegged 2022 harvest rapeseed area at 336Kha, 9% higher than 2021 levels. Based purely on five-year averages, this pegs production potentially at circa 1.1Mt.

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