23 January 2018
There were limited price movements in grain markets last week (Friday 12 – Friday 19).
European wheat futures in both Paris and London saw small declines, whilst Chicago wheat gained slightly. Meanwhile, oilseeds price movements were mixed last week. Concerns over an extended period of dry weather in Argentina has pushed up US soyabean futures. In Europe, the euro has continued to strengthen against the dollar, pressuring French rapeseed futures.
In the latest International Grain Council (IGC) report on 18 January, a 2% fall in world wheat production was projected for 2018/19, to 742Mt. Given likely firm demand, the first drawdown of stocks is predicted since 2012/13.
UK wheat exports (September – November) totalled 158Kt, down 71% on the same period last year and the smallest volume since 2013. The low export volumes observed are a reflection of the tighter supply seen in the UK this year. In contrast, UK maize imports (July-November) are the highest on records back to 1992/93, driven in part by an increased demand from the animal feed sector.
Based on the recently published Early Bird Survey of planting intentions for harvest 2018 and the five year average yield (8.2t/ha), UK wheat production could be 14.4Mt in 2018. This forecast production level is 3% down on 2017 and suggests that unless high yields are observed, UK wheat supplies could be relatively tight in 2018/19.
Dry weather across Argentina, has delayed planting and has led to concerns over the crop. As a result Chicago soyabean futures rose on consecutive days last week. Conditions in the North Western provinces of Salta and Tucuman have led the Buenos Aires Grain Exchange to hint that it may reduce its planted area estimated for 2017/18 further from 18Mha. In the Exchange’s weekly report it was revealed that 30% of the 1Mha regularly used for soyabean is yet to be planted. Crops planted late in Argentina are more vulnerable to potential early frosts in May and June.
Brazil’s 2017/18 soybean harvest has had a slow start according to AgRural. The slow start may be a result of delays in planting due to issues with soil humidity and above average rains in January. Any reduction of available Brazilian soyabeans will enable other soyabean origins the opportunity to extend their sales windows in global markets.