12 December 2018
The wheat export potential for the US and EU was the key driver of global grain markets last week (30 Nov - 7 Nov).
Both US and Paris wheat futures slumped midweek on concerns about potential exports. However, both markets received a boost on Friday and ended the week higher after stronger than expected US export data.
Top global wheat importer, Egypt, again bought Russian and Ukrainian wheat in its latest tender. Egypt had bought US wheat in its last two tenders, which had been taken as a sign that Russian exports might have been slowing down. This would potentially create opportunities for other exporters, especially the US. However, Egypt reverted to Black Sea supplies in the latest tender, which was taken as a negative sign for the US export potential.
For the EU-28, wheat exports continued to be forecast at 20.0Mt by the EU Commission last week (21.3Mt in 2017/18). This came despite the organisation increasing its estimate of the 2018 crop, with soft wheat (exc. durum) production in 2018 being increased by 1.8Mt to 129.2Mt. While total output is still sharply below last year’s level, combined with a hike to the maize import forecast (up 2.2Mt from November), it does point to a slightly less tight European grain supply situation than previously forecast. Meanwhile, France exported just over 1.1Mt in October taking the Jul-Oct total to 5.1Mt, 8% more than the same period in 2017/18. Shipments to non-EU destinations in Jul-Oct were up 38% year on year, with Algeria the top export destination (Reuters).
Global oilseed markets were driven by differing factors last week. Chicago soyabean futures (May-19) rose over the course of the week, bolstered by hopes of a resolution between the US and China following the G20 summit. Meanwhile, Paris rapeseed futures (Nov-19) continued to drift, as limited demand and logistical problems dampened concerns over new crop supplies.
Canadian canola (oilseed rape) production has been estimated at 20.3Mt by Statistics Canada. This is higher than the estimate made in late August (19.2Mt), but below the 20.8Mt anticipated by the trade in a Reuters’ poll.
In Australia, canola production is forecast by the Australian government to fall by 39% year-on-year to 2.2Mt. On average over the past five seasons, Australia has accounted for around 17% of global oilseed rape exports. Last month, the USDA forecast Australian exports to reach 2.2Mt this season. If Australian production only reaches 2.2Mt, exports could be lower than the current USDA forecast.
The first of this season’s crop development and condition reports (produced for AHDB by ADAS) highlight the dry autumn and its challenge for oilseed rape. An estimated 73% of the GB rapeseed area is in good or excellent condition, and a further 14% in fair condition as at late November. However, 13% of the crop is in poor or very poor condition. Many crops also suffered cabbage stem flea beetle damage, especially where conditions were drier.