Frontier Agriculture
Member
World markets
US wheat futures closed higher again on Friday, showing a reasonable net gain over the week. Ongoing dryness in the Plains supported markets after winter wheat crop ratings were released at 16-year lows. The USDA caused downside at the end of the previous week, with a bigger than expected spring wheat area predicted. However, last week cold conditions and snow brought about further talk of weather conditions still resulting in a smaller spring wheat area than the USDA estimated. Weather forecasts for this week show continued cold and snowfall in the North Plains and Midwest (which already has near record snow cover) and continued dry conditions for the key winter wheat area of the West Plains.
Argentina has a good amount of rain in the forecast this week which is needed to replenish soil moistures after a six-month period of dryness. Farmers have commented that soil moistures are too low for seeds to germinate but, with the main drilling window for wheat coming up, this rain should improve conditions as long as it arrives as forecast. Australian wheat moved higher last week on the back of their dry forecast – they do have some showers forecast in the East but large areas are still remaining dry.
Matif wheat closed higher last week, helped by stronger US markets and a weaker euro but they had another week of poor export figures which are running 25% down on last year. This points towards a big stock build at the end of the season. FranceAgriMer rated French soft wheat conditions unchanged this week, at 78% good to excellent versus 90% last year. Conditions in Russia look to be improving with some warmer and drier weather moving in. This will be welcome in light of spring drilling and fieldwork running behind last year’s pace so far.
UK markets
London wheat futures closed slightly higher in old crop positions on Friday but weaker for new crop. However, over the week there was a net gain across the board. Support came from weather issues both overseas and at home in the UK.
We continue to see a north/south divide in terms of demand for feed wheat, with plentiful supplies along the south and east coasts but hungry consumers in the north and Scotland eating up Northern supplies. There has been some switching away from wheat consumption to maize in the ethanol and distilling sectors but not enough to ease the squeeze on spot wheat supplies. On top of this inclement weather, this means the grass is not growing which results in even stronger feed demand from the livestock sector.
The late UK spring is also a factor for new crop markets. Winter crops are sitting in sodden, cold fields making no progress and spring crops are yet to be sown in most places. There have been a few days of better weather allowing some progress on light land but many fields are too water logged to get on, with even more rain in the forecast for this week. This could all look very different in ten days time but at the moment farmers are not keen to sell until they see an improvement. As a result, prices are underpinned.
Oilseed rape
Soy overnights have firmed on more conciliatory language from President Trump over the weekend and higher expectations that a new trade agreement with China is possible, avoiding the imposition of tariffs on soybeans. Any settlement now will be seen as negative for other proteins (including rapeseed).
Consensus on the Argentine crop seems to be settling around 38 million tonnes – 35% lower than the first crop assessments.
Heavy rapeseed stocks will keep old crop on the defensive with little time to benefit from the points above.
US wheat futures closed higher again on Friday, showing a reasonable net gain over the week. Ongoing dryness in the Plains supported markets after winter wheat crop ratings were released at 16-year lows. The USDA caused downside at the end of the previous week, with a bigger than expected spring wheat area predicted. However, last week cold conditions and snow brought about further talk of weather conditions still resulting in a smaller spring wheat area than the USDA estimated. Weather forecasts for this week show continued cold and snowfall in the North Plains and Midwest (which already has near record snow cover) and continued dry conditions for the key winter wheat area of the West Plains.
Argentina has a good amount of rain in the forecast this week which is needed to replenish soil moistures after a six-month period of dryness. Farmers have commented that soil moistures are too low for seeds to germinate but, with the main drilling window for wheat coming up, this rain should improve conditions as long as it arrives as forecast. Australian wheat moved higher last week on the back of their dry forecast – they do have some showers forecast in the East but large areas are still remaining dry.
Matif wheat closed higher last week, helped by stronger US markets and a weaker euro but they had another week of poor export figures which are running 25% down on last year. This points towards a big stock build at the end of the season. FranceAgriMer rated French soft wheat conditions unchanged this week, at 78% good to excellent versus 90% last year. Conditions in Russia look to be improving with some warmer and drier weather moving in. This will be welcome in light of spring drilling and fieldwork running behind last year’s pace so far.
UK markets
London wheat futures closed slightly higher in old crop positions on Friday but weaker for new crop. However, over the week there was a net gain across the board. Support came from weather issues both overseas and at home in the UK.
We continue to see a north/south divide in terms of demand for feed wheat, with plentiful supplies along the south and east coasts but hungry consumers in the north and Scotland eating up Northern supplies. There has been some switching away from wheat consumption to maize in the ethanol and distilling sectors but not enough to ease the squeeze on spot wheat supplies. On top of this inclement weather, this means the grass is not growing which results in even stronger feed demand from the livestock sector.
The late UK spring is also a factor for new crop markets. Winter crops are sitting in sodden, cold fields making no progress and spring crops are yet to be sown in most places. There have been a few days of better weather allowing some progress on light land but many fields are too water logged to get on, with even more rain in the forecast for this week. This could all look very different in ten days time but at the moment farmers are not keen to sell until they see an improvement. As a result, prices are underpinned.
Oilseed rape
Soy overnights have firmed on more conciliatory language from President Trump over the weekend and higher expectations that a new trade agreement with China is possible, avoiding the imposition of tariffs on soybeans. Any settlement now will be seen as negative for other proteins (including rapeseed).
Consensus on the Argentine crop seems to be settling around 38 million tonnes – 35% lower than the first crop assessments.
Heavy rapeseed stocks will keep old crop on the defensive with little time to benefit from the points above.