Read our commentary on latest developments in the global cereals and oilseed markets.
Please note that from now on this commentary will only be updated monthly. To follow developments in cereals and oilseed markets in the meantime, please see the markets section of the website of AHDB Cereals & Oilseeds.
May 2017 update
There is little doubt that weather is the word of the month for arable markets, be that too little rainfall in Europe or too much rainfall and snow in parts of the US.
UK feed wheat futures (Nov-17) increased by £3.70/t (2.7%) between 18 April and 24 May to close at £141/t. In response to weather concern futures had risen further mid-month climbing to £143/t on 12 May, a contract high, before falling back as rainfall hit the UK relieving potential crop stress. Paris wheat futures (Dec-17) fell by €2.75/t since 18 April to close at €171.25/t on 24 May
Similar relief was seen in Chicago wheat futures, with prices also climbing early in the month on concern of wet weather in parts of the US and snow in Kansas, peaking at $179.75/t on 2 May. The subsequent releases of US crop condition reports eased concerns, and the release of the USDA World Agriculture Supply and Demand Estimates (WASDE) helped to ease markets (read more below). Chicago wheat futures (Dec-17) closed down $1.56/t from 18 April to $171.85/t on 24 May
As mentioned above the big data release mid-month was the USDA WASDE, which contained the first projections for 2017/18 The release highlighted total maize output is expected to decline by 31.4Mt in 2017/18 to 1.03Bt. However, global demand is projected to increase by 2.2% to 1.06Bt. End-season stocks are forecast at 195.3Mt, 12.8% lower year on year and the lowest since 2013/14. It is more meaningful to look at the stocks-to-use (STU) ratio rather than just stock levels in isolation. The maize STU ratio in 2017/18 is forecast at 18.5%, equal to that in 2013/14.
Global 2017/18 wheat production is forecast 2% lower year on year at 737.8Mt, but is the second highest figure on record. However total consumption is also expected to decline, only slightly, meaning that closing stocks for next season are seen 1.2% higher at a record 258.3Mt. The STU ratio for wheat is projected at 35.1% in 2017/18 up from 34.7% this season.
Global protein markets moved down over the month (18 April to 24 May), but as with grain markets, started the month moving higher on weather concerns. Rainfall in the US threatened to delay plantings of soyabeans which pushed Chicago soyabean futures (Nov-17) up to a mid-month high of $356.38/t. Chicago soyabean futures (Nov-17) closed at $348.3/t on 24 May, down $3.21 from 18 April.
Similar moves were seen in Paris rapeseed futures which felt the combined lift from delayed soyabean planting concerns and also the release of Canadian canola (rapeseed) stock levels, which were at their lowest level for the past four years at 6.6Mt. Paris rapeseed futures increased to €376/t on 8 May before falling back later in the month to close at €364.75/t on 24 May, as the release of the WASDE pressured markets.
As with grains, the USDA WASDE estimates that global soyabean output is to fall in 2017/18, with the new crop forecast at 344.7Mt compared with 348.0Mt in 2016/17. Consumption is forecast at 344.2Mt, 12.9Mt higher year on year. Subsequently, 2017/18 closing stocks are projected at 88.8Mt, 1.3Mt lower than 2016/17’s record levels. The global STU ratio is forecast at 25.8%. The global stocks level was higher than expected which added weight to the market.
UK delivered rapeseed prices followed the overall global downward trend. Rapeseed delivered into Erith (Spot) finished the month at £333.50/t (19 May), down £7.50/t from the 21 April.
James Webster, Analyst
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