Tag: Oilseeds

Arable Markets

Overall Comment

Whilst in some counties over the last week the weather has been harsh, over the country it appears overall, December has so far been considerably ‘less wet’ than the previous 3 months. But with soils already saturated it does not take much to keep the land impassable. Now the crops are mostly dormant meaning nothing is transpiring the water away, and minimal evaporation is taking place either as temperatures are too low with high humidity. In other words, a millimetre of rain here and there has been topping up the already sodden soils. Cold dry frosts have also been scarce this autumn, meaning that grain conditioning in store has been difficult. Some samples, particularly of barley have been losing premiums because of infestations. Managing grain quality will become increasingly difficult this winter.

Wheat

Nevertheless, the AHDB has reported they consider the winter wheat planted area has now risen to about 60 of intended plantings, suggesting progress of about 5% since the last of these bulletins was published. Clearly, at this rate, and if weather conditions do not change, there will still be about 30% of the planned winter wheat area undrilled at the end of February; about the end of the window available for drilling most of the varieties currently sat in bags in farm barns around the country.

UK grain traders have had a challenging time this season, unable to book grain exports past the official Brexit dates. For a year with a large crop to sell, this has affected market prices. Perhaps some clarity in the New Year will facilitate the rest of the marketing campaign.

Barley

Old crop markets are asleep already in preparation for the Christmas break. Its not even planted yet, but the prices for the 2020 crop have not been great, with expectations of very large UK and EU crops. Few buyers are buying much new crop yet, as prices are so bearish. Certainty regarding the EU departure will support the buying confidence.  Seed traders have been gathering what spring barley tonnages they can and, between them, it appears there is enough available for in excess of a million hectares to go in the ground, as soon as conditions allow. This would be the highest spring barley crop since 1988, and the largest total barley crop since 1990; that is, assuming it is dry enough to drill by then.

Oilseed Rape

Global demand for vegetable oils is strong. The Chinese still demand vast tonnages of soybeans, despite millions of its pigs, who et the meal) have been slaughtered because of African Swine Fever. This might shift the balance of demand between oil and meal which would favour crops like oilseed rape that have a higher oil content. Certainly, oilseed rape has done quite well over the last month, regardless of the overall movements of sterling.

Pulses

Pulses trade quickly in the first half of a marketing year, then slow down for the second half. The export market for pulses for this season is quickly reaching that point, partly as the Australian crop will be competing strongly come January, and also because of customs clearance deadlines in North Africa.

 

 

Arable Market Update

This time last year we took a look at the global grain supply and demand figures supplied by the International Grains Council (IGC).  The IGC is a politically independent body, so therefore theoretically has greater credibility than the US Department of Agriculture, the other major organisation that publishes global grain statistics.  The only issue is that the IGC has a secretariat of about 20 economists, and the USDA, some thousands, with people on the ground in every region of the world.  In any event, the figures from the two organisations are often relatively similar!

Twelve months ago, we discussed how wheat stocks were at their highest ever, in physical terms.  This year, running at 38 million tonnes (or 5%) less, the fundamentals are looking more positive for grain long-holders (farmers).  Furthermore, as can be seen from the change in pre-harvest expectations back in March 2018, to the last set of figures in November, the reality of what has been harvested in the 2018 year (and continues to be cut in the Southern Hemisphere) is lower than initial estimates; again, bullish for price.  The stocks to use ratio is lower than last year at 35.4%, but still considerably higher than the previous two years, suggesting accessing the right specification and location of wheat by consumers is unlikely to be challenging to buyers in the coming season.  A lower level of stocks held by exporters offers a glimmer of hope to those waiting for prices to rise, but it also suggests that importers have more stocks so might buy less.

 

17/18 figures forecast; 18/19 estimates   1 Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US    2 Argentina, Brazil, Ukraine, US    3 Argentina, Brazil, US

A look at the maize figures shows a different story; one of rising stocks and increasing availability.  This indicates that crops grown for energy alone (animal feed and bioethanol purposes primarily), are in relatively bounteous supply.  It suggests that the premium for milling varieties might benefit in the coming year.  However, in another interesting twist to the story, as stock levels are expected to be so much lower this year than for the last few (because of rising usage), the stock:usage ratio is seen falling.  Furthermore, the Egyptians (the world’s largest wheat importers) have been buying Russian wheat at prices above anything they have paid for 4 years.  This, coupled with a weakened Sterling because of recent political shenanigans, supports UK wheat prices.  We are still a long way from harvest 2019 (the IGC hasn’t even started to forecast supply and demand for it as yet).  There was a view that, barring major weather events, as we approached harvest 2019 there would be a downwards ‘correction’ in wheat prices as availability rose.  There is now perhaps a lesser chance of this happening. 

Barley markets are quiet ahead of Christmas, with few buyers or sellers, including no new export business. Premium samples of malting barley retain a good premium for those still unsold.

The oilseed marketplace has seen prices move a little more than grains this month, partly because of the Chinese/US politics which affect soy beans but also as the southern hemisphere crop is being harvested and some is already sold and loading for delivery into the EU.