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.
June 2017 update
Over the past month global and domestic grain markets have been largely driven by weather. With hot and dry weather prominent across key grain growing regions at the moment, markets are considering how conditions between now and harvest could impact on new crop prospects.
In response to adverse conditions in parts of the US, EU and Black sea region, amongst other factors, wheat futures have risen over the past month. New crop UK feed wheat futures (Nov-17) climbed £5.50/t between 25 May and 21 June to close at £147.00/t. Similarly, new crop Paris milling wheat futures (Dec-17) gained €7.50/t over the same time frame, to close at €178.75/t on 21 June.
The US wheat futures markets have arguably seen the most activity over the past month, with new crop (Dec-17) Chicago wheat futures gaining 8% ($13.04/t) between the 25 May and 21 June, to close at $184.43/t.
On the other hand, Dec-17 Chicago maize futures recorded a slight decrease ($0.30/t) over the same time frame, closing at $152.26/t on 21 June. In response to weather concerns the contract had risen to $159.84/t on 6 June, a high for this period, before falling back due to improved conditions across parts of the US maize belt.
Defra’s latest UK supply and demand estimates, released on 21 June, suggest that the UK will be a net importer of wheat in 2016/17 and enter the new marketing season with a relatively low level of stocks.
Imports of wheat this season have been forecast at 1.7Mt, 13% higher than in 2015/16, while exports have been pegged at 1.5Mt, 47% lower than last season. While export demand is expected to fall, total domestic consumption of wheat in 2016/17 is forecast to rise by 6% on the year. Usage of wheat and barley in 2016/17, for animal feed, has been pegged at 7.2Mt (up 2% on 2015/16) and 3.6Mt (up 1% on 2015/16) respectively.
Similar to grains, global weather developments have been a key watch point for protein markets. Chicago soyabean futures (Nov-17) closed at $340.86/t on 21 June, $4.22/t lower month on month (25 May – 21 June). Furthermore, the contract fell by over $8/t from 16 June, a high for this period, due to favourable weather in parts of the US.
The latest USDA World Agricultural Supply and Demand Estimates pegged global soyabean closing stocks for 2016/17 3Mt higher than in May, at a record 93.2Mt, which weighed on markets earlier in the month. Furthermore, with limited changes to other supply and demand figures month on month for 2017/18, apart from a 0.5Mt reduction in forecast exports, closing stocks for 2017/18 are forecast at 92.2Mt (88.8Mt in May).
Unlike soyabeans, Paris rapeseed futures (Nov-17) closed up marginally (€0.75/t) on the month (25 May – 21 June), at €362.25/t on 21 June. Nonetheless, similar to soyabeans, the contract has fallen by €8.00/t since 19 June, partly on the back of improved EU weather prospects.
New crop UK delivered rapeseed prices (November delivery, Erith) have fallen by £2.00/t since the 26 May to £315.50/t on the 23 June.
James Webster, Analyst
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