Farming News - Wheat & OSR market update from ADM

Wheat & OSR market update from ADM

10 Sep 2021
Frontdesk / Arable / Finance

Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market

The fallout from Hurricane Ida which ripped through the US Gulf Coast has kept US markets on the defensive as spring crop harvests approach.

The storm caused flooding, power loss and damage to the US export infrastructure. The resulting slowing of shipments from the region, together with a potential surge in global covid levels and talk of slowing Chinese import demand, may keep markets on the defensive in the short term. 

The return of rains to the US Midwest has also added to the bearish tone as long-holders started liquidating their positions that were built up during the prolonged drought across key crop areas of North America.

However, the long-term scenario remains supported, with tightening global stocks. 

Looking at areas in more detail, Australia’s research bureau ABARES has increased its estimate of the country’s 2021 wheat crop to 32.6mln t, compared with vs 33.3mln t this time last year.

Recent rains have replenished wheat fields across much of Argentina’s grain belt.

Canada has turned wetter, too late to boost the wheat crop (reported at a 14-year low of 23mln t) but on time to disrupt harvest and increase quality concerns.

Over much of the eastern EU and in southern Russia rain is needed to establish winter crops, although Ukraine has seen more favourable conditions. 

Ukraine continues to push grain exports, which have risen 14% so far this year to 9.1mln t. including nearly 5mln t of wheat. Egypt’s state buyer (GASC) purchased 300,000t of Russian/Ukrainian wheat in its latest international tender.

However, Russian wheat yields continue to decline, reported at 2.94t/ha compared with last year’s 3.3t/ha. Wheat exports are put at 5.8mln t, down 18%.

China’s market information service CNGOIC has cut its domestic corn demand to 276mln t, which would be 20mln t lower on the year. 

Latest crop data shows that only about 30% of French soft-wheat analysed has achieved the minimum milling 76kg/hl specification.

The UK harvest is entering its final stages, although high moistures and variable quality are slowing down movement and there is limited consumer demand. Total wheat output is uncertain but it looks like the figure will fall below 15mln t.

Lower kill rates in pig and poultry processors is being reported. This is mainly due apparently to staff shortages rather than lower demand.

USDA will release its latest global supply and demand estimates tomorrow. With little change expected for global wheat inventories, the focus again will be on corn (maize) area and yield to provide the next directional movement for wheat. 

* On the ADM Agriculture YouTube channel this week, head of grain trading, Jonathan Lane, and national feed wheat trader, Freddie Humfrey, look at the grain market from a technical perspective.

Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market

CBOT soybean prices have been mixed this week. The market felt supported at the start of the week following recent Chinese purchases, but there are concerns that Gulf exports may be delayed due to damage caused by the recent hurricane.

US weather remains dry for the next week with temperatures above normal. This week’s crop ratings showed a 1% increase to 57% good/excellent (65% last year).

South American markets remain quiet. Brazil has reduced its biofuel mandate to 10% from 13% and Argentina reduced its level  to 9%.

Canadian canola prices tried to rally, but have struggled to hold on to gains as the week went on. Weather forecasts are now showing rain in the next week, which won’t be welcome with harvest coming.

For the time being prices may have done enough to ration demand (or things are just taking a breather) before Friday’s USDA report. A private Reuters survey pegs average trade estimates for Canada’s ending stocks for 2020/21 at 1.2mln t, while Statistics Canada released stock estimates at 1.8mln t.

The Australian canola crop is now estimated to be 5.03mln t compared with the 4.2mln t estimated by ABARES in June.

EU rapeseed prices broke out of the recent range to touch new contract highs in yesterday’s session. Strategy Grains cut its EU crop estimates down 100,000t from 17.03mln t to 16.93mln t. All eyes will be on the USDA WASDE report at the end of the week.

UK prices remain close to season highs with sterling now trading at the lower end of its recent range.