25 April 2018
Global grain futures slipped lower last week, led by the US wheat market.
Markets were supported earlier in the week by concerns over continuing dry weather in the US plains. However, markets declined sharply towards the end of the week as the US dollar strengthened against most currencies and forecasts showed rain for the weekend. This is an area to watch going forward as less rain arrived than was forecast.
Chicago soyabean futures (May-18) fell last week to close at a two week low. Trade worries between China and the US continued to provide downward pressure on US soyabean futures with bullish production figures doing little to offset it. Meanwhile in Europe rapeseed futures fell with anecdotal reports of reduced demand from crushers and increased competition from biodiesel imports. Domestic rapeseed prices also trended downward but a weakening pound helped reduce price decreases.
Ukrainian barley output could decline to 7.75Mt in 2018/19, according to UkrAgroConsult, from 8.3Mt in 2017/18. A late spring has delayed planting and is expected to result in a 6% smaller planted area. Fields not planted with spring barley are likely to instead be planted with maize or sunflowers. A smaller harvest for major barley exporter Ukraine, could be supportive to barley prices relative to those for other grains.
World soyabean production is likely to decrease 10Mt to 338Mt in 2017/18, according to OilWorld (www.OilWorld.Biz). This is due in part to a reduction in Argentinian production which is estimated to have fallen to a nine year low of 37Mt. OilWorld estimates that due to this reduction there will be a global production deficit, in 2017/18, which will cause a 3Mt reduction in soyabean stocks.
The German association of farm cooperatives marginally decreased its rapeseed production forecasts to 4.62Mt. This is a 0.05Mt reduction from its previous forecast but a 8.3% increase on the year. Germany is the second largest producer of rapeseed in Europe and production changes can have a large impact on European rapeseed production.