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.
April 2018 Update
- US wheat futures rose at the start of April over concerns of the continued severe weather in the country. Snow coverage in key spring wheat growing states of North/ South Dakota, Montana and Minnesota caused worries over potential delays in spring planting. Chicago wheat futures (May-18) reached a high of $180.76/t on 10 April, increasing by $15.80/t since 27 March. However, prices sharply dropped off in mid-April after forecasts of rain in drought stricken US plains.
- Cold and wet weather has delayed spring planting over much of Europe, according to the latest European Commission bulletin. However, despite the adverse weather stalling the growth and development of winter crops, the commission reports that there is no lasting damage.
- Across the Atlantic, cold weather has continued to affect crop conditions in key Hard Red Winter wheat growing states. In Kansas (the largest US wheat planting state) 46% of wheat was rated as poor and very poor (USDA, 16 April).
- US wheat planting intentions were forecasted are up 3% on the year at 19.1Mha, according to the USDA’s prospective plantings (29 March). This is predominantly driven by an increase in spring wheat planting. This is, however, the second lowest planted area on record (since 1919).
- US maize planting intentions are 2% lower than in 2017, at 35.6Mha. Compared with this, soya planting decreased by one percent, suggesting that soyabeans could win the fight for dirt.
- Trade worries between China and US have provided downward pressure on US soyabean markets this month. On 4 April, China released a list of 106 US goods upon which they are considering a 25% tariff on, which included soyabeans. This resulted in Chicago (May-18) prices falling by over $17/t. If the tariff comes into effect, this could add extra pressure on Brazilian supplies, China’s largest source of soyabeans.
- Due to the persistent drought affecting Argentinian soybean growing regions since November, the USDA has revised its forecast for the 2017/18 crop down to 40Mt, the smallest crop since 2008/09. Some rain did arrive in late March and into April, but for the bulk of soyabeans it was too late for wider recovery. As a result, it is likely that Argentina will become net importers for the 2017/18 season to maintain their crushing operations.
- Both the USDA and Conab increased their soyabean production forecasts for Brazil to 115Mt, the largest on record (10 April). Nevertheless, this is not enough to offset Argentinian shortcomings.
- According to Oilworld (www.oilworld.biz), the production of EU rapeseed crop stands at 22.2Mt, representing a three-year high. However, the German association of farm cooperatives has recently decreased its production forecast by 0.5Mt, to 4.62Mt. As Germany is the second largest producer of rapeseed in Europe, this could impact European rapeseed production.
Pound hits highest value against dollar since Brexit vote
In April, sterling strengthened to a 22 month high against the US dollar. Since 27 March, the pound has appreciated by 1.8%, to close on 17 April at £1=$1.4322. Also over this period, the pound strengthened against the euro, increasing by 1.9% to close a £1=€1.1590 on 17 April.
This is the strongest sterling has been against the dollar since the EU referendum vote (23 June 2016). A stronger pound means imports (in dollar terms) are cheaper, but UK prices in the context of global exports (traded in dollars) will be less price competitive.
Felicity Rusk, Trainee Analyst