Globally, with the Northern Hemisphere wheat harvest now virtually complete, attention is quickly turning to growing conditions in Argentina and Australia and planting conditions in Ukraine and Russia.

The chances of La Nina now stand at 80% probability, bringing dry conditions in South America and rainfall in Australia. The dry weather in Argentina has reduced the expected size of the wheat crop to 17.5 million tonne, 4.5mt below the July estimate. However, the flipside of wetter weather in Australia is maintaining confidence in a crop close to 29mt, with 19mt to export after Christmas, up 10mt year-on-year.

Due to the drought-like conditions in Ukraine, the winter wheat area currently being planted is already being forecast down 10% year-on-year. Dryness remains a concern in Russia too for winter wheat planting; with more than 60% of the area already planted, rainfall is very much needed now in southern Russia.

The UK wheat market remains tight, with slow farmer selling. On paper, 2020/21 now looks increasingly short of wheat, as the AHDB/Defra September Balance Sheet raised more questions than it gave answers. Wheat ending stock estimates for 2019/20 were reduced from 3.4mt to 2.4mt.

The discrepancy is most likely due to Defra overestimating 2019/20 production, but with such large swings, trust in ‘official’ data has been further eroded in a year of increased market volatility.

Peter Collier, CRM Agri

European wheat markets found support earlier this week, as a result of ongoing dry weather across much of the Black Sea and talk of further sales of French wheat to China. There are increasing concerns about the potential of the 2021 Russian wheat crop due to low levels of soil moisture.

Although planting has reached 60% of the planned area, in line with last year, rain is desperately needed for crops to germinate and establish ahead of the winter. But any notable amount is currently lacking.

Russia has previously signalled that it may introduce export curbs in the second half of this season, depending on the crop size and export pace. Concerns over the 2021 crops must also be a factor in ensuring sufficient domestic supplies are maintained. Russia’s Deputy Agriculture Minister, Oksana Luk, said that the country’s export quotas are relevant even with a good harvest.

Export restrictions for the world’s leading wheat exporter would create further price volatility, however, the United States Department of Agriculture (USDA) published its quarterly grain stocks report on Wednesday afternoon which proved the catalyst for an explosive price rally on futures markets.

The Chicago Board of Trade (CBOT) wheat futures added over 6% to their value, followed by Paris and London wheat futures adding €5 and £4/t, respectively, before markets closed.

The data from the USDA took traders by surprise, with corn and soybean stocks 10% below expectations. Wheat was 5% below expectations and 10% lower than this time last year. The US 2020 wheat crop was also cut by just over 300,000t from previous estimates.

Simon Ingle

Prior to the USDA releasing its latest stocks report on Wednesday evening, it had been one-way traffic for the global oilseeds markets. Down. Rapeseed, soya beans, vegetable oil and meal prices were all lower, week-on-week; some markedly so (KL palm oil, -6%). And for honest reasons; purchases of US soya beans by the Chinese had slowed dramatically.

As their ‘Golden Week’ holiday period loomed, the US dollar was on the front-foot, acting as a deadweight, US soya bean harvest progression beat expectations, at 20% complete, decent rains had fallen across Europe, aiding nubile rapeseed plant growth and all appeared ‘hunky and dory’ for Australia’s impending canola harvest.

Oilseed markets had thus been on the back-foot, especially with CBOT soya bean futures having recently established a massive, speculative long position (+200,000 lots), with enriched traders eager to book profits (sell).

However, the USDA’s bullish stocks report comprehensively wrong-footed the market, as both corn and soya bean stocks came in substantially under market expectations. Market sentiment quickly reversed, with US soya bean futures now seemingly entrenched above the key $10/bushel support level.

It will take a few trading sessions for these fresh US numbers to be fully digested by the market and for prices to settle. In the meantime, UK rapeseed sellers should sit tight and see where the dust settles. Short-term price prospects appear favourable, although having just been mightily fed, the Chicago bulls will need more feeding ahead to maintain back-fat levels.

Rupert Somerscales, ODA

There are some encouraging signs of some upward movement in grain values which seem to be due to weakening of Sterling and some sentiment that the premium over conventional is too small given the gains made by the conventional market; but please don’t order a new combine.

Values are only edging upwards and are still below levels of last year. Feed grain values are about £40/t lower than this time last year which makes profitability marginal for many. Feed buyers remain concerned about potential lockdown and this is making them cautious about the cover they take.

We are still seeing very little interest in malting barley and beer sales will be further hit by the recent changes in socialising announced by the Government so there is little prospect of this market bouncing back quickly. One oat buyer reports having cover in place until the new year on carry-over stocks, reducing liquidity in the market but a cold spell of weather will hopefully get everyone eating porridge.

There is interest in milling wheat and buyers are coming to market and hopefully will respond to the slightly higher feed base with some improved bids. With some reports of panic buying starting we may see growth in demand for milling wheat as we did in March and April. We are seeing some good quality samples coming

through which is encouraging.

Andrew Trump, Organic Arable