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.
January 2019 Update
Reference date: 11 December 2018 – 22 January 2019
UK feed grain prices made substantial gains in December on the back of Brexit uncertainty which pushed the value of sterling lower. As we entered the New Year, the direction of prices shifted, sterling has strengthened considerably recently, pushing UK grain prices lower. The US federal shutdown has also kept markets suppressed, with no new data coming forward to lift the market.
The picture for global exports has also been really important for grain prices. Strong exports of Russian wheat had acted as a ceiling for global grain prices. However, exports from the nation have slowed of late. While this would ordinarily be supportive of prices there is still a high volume of wheat to be exported globally, particularly by the US and the EU.
The results of the AHDB early bird survey (EBS) of UK cropping intentions were released in December. The survey highlighted a 4% rise in the area intended to be planted to wheat in the UK and a 14% rise in the area intended for winter barley.
At a global level, estimates for EU cereal production for 2019/20 were released by Stratégie Grains In January. Production of cereals in the EU is forecast to grow by 11% in 2019/20. This has supressed new crop (2019/20) prices.
Both UK delivered rapeseed prices and Paris rapeseed futures prices (nearby) decreased over the month. A strengthened sterling has recently pushed Delivered rapeseed prices lower still. Soyabean prices fell over the course of the last month. Reduced production forecast for Brazil were outweighed by the lack of progress in the US/China trade talks.
The soyabean harvest in Brazil is underway, and will be watched closely with regard to global soyabean availability and prices.
The area intended to be planted to oilseed rape in the UK for 2019 harvest is forecast by the EBS at 582Kha, down 3% from the year previous. Planting this season has been affected by poor establishment conditions, and cabbage stem flea beetle damage. As such the final planted area may be lower than expected.
The rapeseed area in Western Europe also looks set to decline, this should support new crop rapeseed prices. That said, there has been an increase in plantings in Eastern Europe, which could support any shortfall in EU supplies.
Sterling has firmed considerably against both the euro and the dollar in recent weeks, driven by Brexit negotiations. The euro-dollar exchange rate fell over the reference period.
Alex Cook, Trainee Analyst
Alex.Cook@ahdb.org.uk, 0247 693 5746