09 January 2018
The first week of 2018 was flat for global grain markets with little movement in prices observed. The European (Paris and UK) markets recorded slight gains last week, whilst Chicago futures also saw a negligible increase.
Fears have grown that a lack of snow in Russia could leave crops exposed to extreme temperatures and risk damage to crops. Recent strong harvests have been helped by crops being covered by a blanket of snow, protecting them from the low temperatures. With an increased importance being placed on the Russian crop, in global terms, due to the recent high production in the country any changes due to weather could influence global wheat availability in 2018/19.
Similarly, sustained sub-zero weather conditions in the US Midwest across the festive period led to concerns of winterkill damage in the winter wheat crop. Though the worst of this freezing weather has likely passed, the damage may already have been done. The USDA’s latest crop condition scores (for the month of December 2017) reported the percentage of the Kansas winter wheat crop rated as good or excellent as 36%, down 15 percentage points from the previous condition scores as at 26 November 2017. Combined with the expectation that the US planted wheat area may decline again this year, this could cause issues for available supply.
Oilseed markets generally saw gains last week. Chicago soyabeans (May-18) made small gains, supported in part by continued drought in Argentina. Paris rapeseed futures (May-18) meanwhile saw larger gains across the week on the back of demand from crushers, with a lack of seller engagement.
The soyabean planted area in Argentina this season is at risk of reduction following continued drought in Buenos Aires according to the Buenos Aires Grain Exchange. 2.25Mha is still waiting to be sown and the lack of soil moisture could cause significant difficulties in the final few weeks of planting ahead.