On Monday night, the trade was expecting national corn and soybean conditions to hold on this week, but instead saw ratings declines ahead of peak heat and dryness in the next couple days. Forecasts do look a bit more mixed past that, not wet by any means but at least bringing some chances and cooler temps... The situation in Canada will remain very dry and warm. Prices are reacting positively...
While the affected Chinese Province of Henan is more noted for its agricultural livestock sector, the region also accounts for 27% of the country’s wheat area and the recent destructive flooding will certainly have had an impact on production and/or grain quality. Until the flood water dissipates, the volume of wheat/crop production threatened is unclear. What is clear, is that any reduction in national output could mean a further draw-down in domestic stocks, or encourage additional grain imports. A supportive element.
Latest NASS crop conditions data sees the US spring wheat crop rated just 11% good/excellent (16% last week), while on the other side, fully 64% of the crop is rated either poor, or very poor. The key Minneapolis spring wheat reference futures market has responded accordingly, jumping over $2/bu (£75/t) since early May. This high quality US wheat normally accounts for 30% of US wheat production and the UK frequently imports it to blend with domestic supplies. With declining US production and sharply higher prices, this places more emphasis on UK milling wheat to perform. Supportive UK 🇬🇧 milling premiums.
Facing one of the worst conditions in history, N American spring wheat markets are on fire (and so is Canadian canola). US markets are reacting strongly, with the largest price jump since 2015 (+12%), impacting our local prices. LIFFE rallied by over £10 last week and should continue to be supported. The usual harvest pressure from the Black Sea hasn't started yet as risk is still ON with ongoing weather concerns. Too warm and dry in US & Canada, too wet in N. EU, too hot in Ukraine. We could soon consider this price pick as an opportunity to engage more sales, but we first need to assess the ongoing threats.
A significant weather event is occurring in Canada that may have an impact on UK 🇬🇧 rapeseed and milling wheat premiums. A weather event is currently occurring across Canada’s key rapeseed (canola) and spring wheat regions and crop production forecasts here are far from ideal. Heat and dryness have been a feature for Canadian farmers for the last couple of months and, for the fortnight or so ahead, conditions are not set to materially improve. High quality spring wheat and canola futures prices have responded accordingly (fresh contract highs). For Uk farmers, this should translate as a positive influence for our rapeseed and milling wheat prices.
Dry and hot conditions are set to feature across key NW US and Canadian arable regions next week and while recent rains have bought some time, the threat remains of a lower production outlook ahead. Crops under threat include high quality spring wheat, corn, soybeans and Canadian canola. Both corn and soybeans have entered their respective flowering period, a key phase where yields can be made or lost. The weather market continues, but with US & global 🌎 stock at historically low levels, we feel a floor may have been set in the market for both grains and oilseeds. Volatility should continue and could soon provide additional selling opportunities.
USDA’s July monthly crop report forecasts a more balanced 2021/22 S&D than the market had expected. However, some assumptions will need to be challenged in coming reports. Brazilian is seen at 93Mt (vs ODA at 85Mt) and US corn yields remain unchanged, despite mixed conditions. World corn ending stocks are up 2Mt (CBOT +1%), soya stocks are 2Mt higher (CBOT +1%) and wheat stocks are seen 5Mt lower (CBOT +3%). Globally, this July update can be considered relatively neutral and prices of both grains and oilseeds are rebounding from recent lows.
Canadian canola futures surged higher today, on the ICE Futures exchange, and the benchmark European (MATIF) rapeseed market is following suit, as concern mount about a potential reduced production outlook in Canada. Dry weather across the Canadian prairies is the primary and immediate concern. Meanwhile, rapeseed harvesting in the largest European production country is being delayed by adverse conditions, with expectations that output may be the smallest since 2001, at just below 3Mt. This is a big positive for the European (and UK) rapeseed market prices. Watch this space.
The price roller coaster continues between strong supports (low stocks) and strong resistances (demand rationing). Consequently any price downside remains limited and a potential bullish scenario is still on the table. Harvest definitive results and North American weather will dictate the 2021 price orientation between now and the end of August...Read more
|t-ice||WHEAT||Nov '21||177.35s||177.35||s||2.35||175.50||177.50||175.50||92||7033||ICE||07/28/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '22||180.15s||180.15||s||2.35||180.15||180.15||180.15||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Mar '22||181.45s||181.45||s||2.65||181.45||181.45||181.45||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '22||183.00s||183.00||s||2.65||183.00||183.00||183.00||5||3288||ICE||07/28/21||12:00:00||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jul '22||179.80s||179.80||s||2.35||179.80||179.80||179.80||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '22||171.85s||171.85||s||2.35||171.85||171.85||171.85||878||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Jan '23||171.60s||171.60||s||2.35||171.60||171.60||171.60||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Mar '23||171.60s||171.60||s||2.35||171.60||171.60||171.60||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||May '23||171.50s||171.50||s||2.35||171.50||171.50||171.50||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
|t-ice||WHEAT||Nov '23||170.45s||170.45||s||2.35||170.45||170.45||170.45||ICE||07/28/21||16:33:52||LONDON FEED WHEAT||LONDON_FEED_WHEAT|
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