Weather concerns over US spring crops and declining prospects in the southern hemisphere are providing support to the global wheat market, although increasing global stocks continue to provide resistance to a major rise, according to ADM Agriculture’s latest market report.
As a result, US wheat prices are up about $7/t on the week. However, the trade is continuing to monitor US/China trade progress following recent news that China would retaliate if US Congress enacts legislation supporting the Hong Kong protestors.
Jonathan Lane, ADM Agriculture’s head of grain trading, explained that US spring harvests continue to lag, with corn and soya beans reported at 22% and 26% complete respectively, although crop conditions remain stable.
“However,” he said, “US winter wheat sowings are progressing well at 65% planted and 41% emerged, in line with last year and the five-year average, although moisture levels are still being reported below last year.
“And, on Monday, Russia’s agriculture consultancy IKAR raised its forecast for Russia’s 2019 wheat crop by 200,000t to 75.6 Mt.
“Conversely, Buenos Aires Grain Exchange has reduced its projection of the Argentine 2019 wheat crop to 18.5 Mt, citing adverse weather conditions for its reduction. In addition, Kazakhstan’s agriculture minister has reported a reduction in exports of almost 3 Mt this marketing year, due to a lower harvest.
“More supportive news was provided by Egypt’s state buyer GASC, which purchased 405,000t of wheat for Nov shipment (285,000t Russian/60,000t Ukrainian and 60,000t French) at its latest tender. The average price was roughly US$9/t above the previous tender (last week) and confirms the recent rally in Black Sea wheat offers.”
EU prices (Matif) are up €4/t on the week, supported by the rise in Black Sea prices and ongoing strong demand for export.
UK prices remain in a state of uncertainty as news of a Brexit deal supported sterling and the prospect of exporting tariff-free looked to be coming closer. However, with Saturday’s Commons approval vote looking to be on a knife-edge, clarity remains elusive.
Lane concluded that the UK certainly needs a dry period of weather in which to make progress with plantings – the next 10 days thankfully look a lot drier.