31 January 2018
Global wheat markets closed higher last week (Friday-Friday).
However, UK feed wheat futures closed lower last week in part due to a strengthening sterling.
There were mixed price movements in the oilseeds markets last week. European rapeseed prices declined in part due to a strong euro. Meanwhile Chicago soyabean futures closed higher Friday-Friday though prices fell towards the end of the week.
Abnormally dry and drought conditions are causing concern in the top four US winter wheat growing states (by area sown), Kansas, Texas, Oklahoma and Colorado. The proportion of area classed as abnormally dry or in some form of drought in these top growing states is the highest for this stage in the year since 2013. As the US winter wheat area is the smallest since 1909, crop conditions are under additional scrutiny this year. If the dry conditions persist into spring it could negatively impact yield potential and potentially US wheat production.
The local USDA office in Buenos Aires has estimated Argentine 2017/18 wheat production to increase to 18Mt, 0.5Mt higher than the USDA’s official estimate. Due to this larger output, total wheat exports for the 2017/18 have also increased to 12Mt, 0.1Mt higher than the USDA’s estimate.
Recent snowfall and warmer temperatures in Russia and Ukraine have helped to alleviate concerns over the condition of the wheat crop. As a result, the region may be back on track for a bumper crop.
The WTO has ruled that the EU must change current anti-dumping duties on Indonesian biodiesel imports. It is likely that the duties will be reduced in the coming months. If this occurs it is expected to boost EU import levels, with the Indonesian trade minister expecting exports to the EU to reach $1.7 billion by 2020.
An increase in biodiesel imports is likely to put EU rapeseed prices under considerable pressure moving forward.
The recent dry weather in Argentina has helped support Chicago soyabean prices. However, midweek the Buenos Aires Grains Exchange reported rainfall which has allowed plantings to resume.
A reduction in demand and poor crush margins are contributing to high EU rapeseed stock levels according to analysts at Oil World (www.oilworld.biz). With biodiesel imports exerting downward price pressure on rapeseed based biofuels, crush margins seem unlikely to recover in the short term.