Frontier Agriculture
Member
World markets
US wheat started higher last week, after crop ratings were released showing a further drop in conditions for winter wheat crops to 20-year lows of just 30% good to excellent. However, gains could not be sustained and Chicago wheat ended lower on Friday and close to unchanged over the week, with Kansas City futures lower on the week. A better forecast for the 8 -14 day period across Colorado, Kansas and Oklahoma could bring some relief to the drought-stricken winter wheat crops and this weighed on markets. US export data also added to the negative tone: weekly sales were poor, leaving the season total running 15% down on last year which is a bigger drop than the 12% forecast by the USDA. New crop export commitments are down 20% on this time last year and are at a six-year low.
Argentina is getting some much better weather, with widespread rain now falling after a prolonged dry spell. This is good news for wheat plantings and there is talk of a possible 10% increase on last year’s area as a result. Australia, however, is still very dry with no change to the forecast and Australian wheat futures climbed to six-month highs last week as a result.
Matif wheat made a five-week high last Monday, but like the US it ran out of steam to close with a net loss over the week by Friday. The Russian ruble saw a 10% slide last week as a result of the political tensions and fresh sanctions. The weaker ruble will make Russian export values even more competitive – their exports for the season are already at 31.8 million tonnes which is up 40% on last year.
UK markets
London wheat ended £0.15/t lower on Friday but still showing a net gain of £1.40/t over the week, holding up well in comparison to values overseas.
Domestic markets continue to be driven by strong demand in the North of the country. The ethanol and livestock sectors are once again hungry for supply and as a result, wheat is being pulled north from the surplus regions of East Anglia and the south coast. The inevitable effect of this is a stretch to haulage capabilities and a widening gap between Northern and Southern pricing.
New crop values also remain well supported in the UK but weather across the board is much improved this week which will hopefully allow spring drilling to finally get going as land starts to dry up, this improvement comes at the same time as a better US forecast and could be a threat to values.
Oilseed rape
Market fundamentals remain well entrenched and well known: small Argentine crop, US stocks plentiful, rapeseed oil burdensome. Anxiety and complexity surrounding the geopolitical front – i.e. import tariffs, Syrian conflict and the crude oil rally – takes centre stage and makes it difficult to predict price direction in the short term.
Currency has taken quite some worth away from local values, but this can change overnight. We can’t rule out further downside as European farmers start to focus on selling old crop rapeseed stocks. On a positive note, the weather forecast for the coming days looks much improved.
US wheat started higher last week, after crop ratings were released showing a further drop in conditions for winter wheat crops to 20-year lows of just 30% good to excellent. However, gains could not be sustained and Chicago wheat ended lower on Friday and close to unchanged over the week, with Kansas City futures lower on the week. A better forecast for the 8 -14 day period across Colorado, Kansas and Oklahoma could bring some relief to the drought-stricken winter wheat crops and this weighed on markets. US export data also added to the negative tone: weekly sales were poor, leaving the season total running 15% down on last year which is a bigger drop than the 12% forecast by the USDA. New crop export commitments are down 20% on this time last year and are at a six-year low.
Argentina is getting some much better weather, with widespread rain now falling after a prolonged dry spell. This is good news for wheat plantings and there is talk of a possible 10% increase on last year’s area as a result. Australia, however, is still very dry with no change to the forecast and Australian wheat futures climbed to six-month highs last week as a result.
Matif wheat made a five-week high last Monday, but like the US it ran out of steam to close with a net loss over the week by Friday. The Russian ruble saw a 10% slide last week as a result of the political tensions and fresh sanctions. The weaker ruble will make Russian export values even more competitive – their exports for the season are already at 31.8 million tonnes which is up 40% on last year.
UK markets
London wheat ended £0.15/t lower on Friday but still showing a net gain of £1.40/t over the week, holding up well in comparison to values overseas.
Domestic markets continue to be driven by strong demand in the North of the country. The ethanol and livestock sectors are once again hungry for supply and as a result, wheat is being pulled north from the surplus regions of East Anglia and the south coast. The inevitable effect of this is a stretch to haulage capabilities and a widening gap between Northern and Southern pricing.
New crop values also remain well supported in the UK but weather across the board is much improved this week which will hopefully allow spring drilling to finally get going as land starts to dry up, this improvement comes at the same time as a better US forecast and could be a threat to values.
Oilseed rape
Market fundamentals remain well entrenched and well known: small Argentine crop, US stocks plentiful, rapeseed oil burdensome. Anxiety and complexity surrounding the geopolitical front – i.e. import tariffs, Syrian conflict and the crude oil rally – takes centre stage and makes it difficult to predict price direction in the short term.
Currency has taken quite some worth away from local values, but this can change overnight. We can’t rule out further downside as European farmers start to focus on selling old crop rapeseed stocks. On a positive note, the weather forecast for the coming days looks much improved.