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.
September 2017 update
Over the last month, domestic and global wheat prices have seen a modest rise. In the UK market, from 25 August to 22 September, Nov-17 feed wheat futures gained £1.60/t to settle at £141.20/t, while Paris Dec-17 wheat rose €3.75/t, closing at €164.75/t on 22 September. Chicago Dec-17 wheat futures gained $5.24/t between 25 August and 22 September, closing at $165.15/t.
Over the same time period, Chicago Dec-17 maize futures saw no overall movement, closing at $137.80/t on 22 September. Prices for the contract closed within a range of $9/t over the period. With US maize harvest only just underway (11% cut as at 24 September), markets are waiting for yield results, following mixed reports throughout the year.
Paris Nov-17 maize futures fell by €4.75/t since 25 August, closing at €155/t on 22 September. The latest forecasts from Coceral (the European association representing the trade in cereals, rice, feedstuffs, oilseeds, olive oil, oils and fats and agrosupply) suggested a 9% year on year increase in French maize production, at 13Mt in 2017/18.
In the latest World Agricultural Supply and Demand Estimates (WASDE) report from the USDA, Russian wheat production was estimated at 81Mt and exports were forecast at 32.5Mt, up 4.7Mt year on year. Despite these bearish supply fundamentals, Russian wheat is securing export demand, for example from Egypt, helping to support Russian prices somewhat.
Meanwhile there have been concerns over of heavy rain effecting the wheat harvest in South America and unfavourable conditions in Australia and Canada.
Domestic supplies of wheat have been estimated to be tight for 2017/18 (read more about our production scenarios here). On 31 August, Defra published estimated cereal stocks held on farms in England and Wales and by Merchants, Ports and Coops in the UK at the end of June. The survey findings revealed that wheat stocks fell to the lowest level since June 2014, a 48% reduction on the year. Additionally, barley stocks were estimated to be 33% lower than in late June 2016 and the lowest since June 2013.
Movements in currency rates have had an influence on UK prices over the last month. Recovering from a record low against the euro on 29 August, the pound subsequently rallied to a two month high on Friday 15 September (£1= €1.1358).
Global oilseeds market performance has been mixed over the past month, with Chicago soybean prices seeing largely steady increases whilst Paris rapeseed has displayed some volatility but has fallen overall over the same period.
Predicted 2017/18 US soyabean production in the latest USDA WASDE is up 1.4Mt on last month’s estimates, to 120.6Mt. This is due to an anticipated increase in yields from 3.32t/ha in August, to 3.36t/ha. The latest projected estimate regarding US production in 2017/18 is up 2.9% from the current estimates for 2016/17. Estimated US stocks to use (STU, ending stocks as a proportion of total demand) for 2016/17 is 17% with the projected figure for 2017/18 growing further to 23%.
Chicago soyabean Nov-17 futures have gained over the past month; this has been predominantly due to bullish news of strong Chinese demand for US soyabeans and changes in US biodiesel import costs from Argentina. Additional bullish predictions for a flood-hampered Argentinian soyabean harvest, concerns over dry weather affecting the Brazilian soyabean harvest and the success of Argentina’s challenge to reduce biodiesel trade tariffs with the EU have increased Chicago futures values.
Volatility in European rapeseed futures market was observed between 6 and 14 September, a decline followed news that Argentina would likely regain access to the European biodiesel market, prices then rose on the back of high demand for US soyabeans.
Nov-17 Chicago soyabean futures rose by 2.8% between 25 August and 21 September, closing at $356.40/t. Brazilian soyameal prices (48% ex-store Liverpool) have remained fairly steady over the past month, falling £1/t by close on the 15 September, to £294/t. Between 25 August and 21 September Nov-17 Paris rapeseed futures fell by 0.9%, closing at €367.30/t on 22 September. This week European rapeseed futures have found support, closing at €373.25/t on Tuesday (26 Sept), up €2.75/t on the previous day. Delivered rapeseed prices (Erith Nov delivery) in the UK were £324/t on 22 September, a decline from £340.50/t on 25 August. This was in part caused by the strengthening of sterling over the same period, from £1=€1.09 to £1=€1.13.
Daniel Rooney, Analyst
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Peter Collier, Analyst
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