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.
November 2017 update
Grain markets have continued to drift sideways over the past month, with a lack of significant news to either drive markets or put them under sustained pressure. On 24 November, UK feed wheat futures (May-18) were worth £144.75/t and since late-August the contract has closed in a range of just £6.75/t.
At the headline level, global markets are well supplied following large harvests for most producers across the Northern Hemisphere. In particular, the 2017 Russian wheat crop is a new record at 83Mt and 14% larger than in 2016 (USDA). Also, while the US maize crop, which accounts for around a third of total global grain output on its own, is 4% smaller than last year, it is still the second-largest on record (USDA).
Planting of the South American maize crops, which are expected to account for around 7% of global grain output in 2017/18 (USDA), is currently underway. While planting is behind last year’s pace, it will continue to be monitored over the next month or so.
There were mixed trends in trade and consumption of UK grain in quarter one of 2017/18 (Jul-Sep) according to data from HMRC and Defra. For wheat, the big change compared with a year ago is the 78% drop in exports. This dip has been partially counteracted by improved domestic consumption. Usage in milling and retail feed production are both up, as are broiler chick placings. However, the news that Vivergo Fuels, one of the UK’s two bioethanol plants, will begin maintenance earlier than planned has cast some uncertainty onto UK markets.
For barley, UK exports were approximately 4% down on the year in quarter one following a strong start in July and August. However, usage in GB retail feed production was up 42%; the increased barley usage will be a key trend for the industry to watch this year.
Similar to grains, oilseed and protein prices have generally moved sideways over the past month. On 22 November, Chicago soyabean futures (May-18) closed at £279.75/t on 24 November, £0.76/t lower than a month earlier. Meanwhile, Paris rapeseed futures (May-18) futures closed at £333.31/t on 24 November, compared to £333.32/t on 24 October. With little change to the headline supply and demand forecasts over the past month, currency has been arguably the main influence on oilseed prices.
With growing confidence in the size of the US soyabean crop, now that harvest is all but complete, attention is shifting south. Soyabean planting is well underway across South America and in both Brazil and Argentina, progress is in line with last year’s pace. In Brazil, planting was 73% complete by 17 November according to the consultancy firm, AgRural after rain provided adequate soil moisture to help boost planting progress. In Argentina, 23% of the anticipated area was planted by 15 November (Buenos Aires Grain Exchange).
South American soyabean production is forecast to be 4% lower than in the 2016/17 season but still the second highest on record. Furthermore, the region accounts for over half of global output and global exports.
The German rapeseed area for harvest 2018 could be the lowest since 2004, at 1.28Mha, based on initial survey estimates from the country’s oilseeds industry association, UFOP. Although Germany is a key EU rapeseed producer, higher rapeseed areas are expected to be sown in France and the UK (other main EU rapeseed producers) compared with last year. Overall the EU rapeseed area in 2017/18 is expected to remain similar to that in 2016/17 (EU Commission).
Helen Plant, Senior Analyst
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