Keeping an eye on the grain market - December 12 update

European wheat markets continue to price in export sales. This week saw 120,000t of French wheat price to Egypt for 5-15 Feb along with Russian, Romanian and Ukrainian.

The weekly EU published export data tally continues to come under scrutiny, with the official data still seen to be on the ‘drag’ by around 1m/mt compared to trade ideas.

Long and short, if Brussels data is correct the EU has a huge amount to ship each week if it’s to make its anticipated annual export wheat total, which ultimately could be logistically impossible.

Interestingly enough, the top destinations for EU wheat this year remains Algeria at 16.6 per cent, followed by Saudi at 14.5 per cent, with Egypt and China the next two top destinations.

China is certainly enjoying EU grains this season as they also account for 20 per cent of all barley shipments, second only to Saudi at 33 per cent. EU grains seems to be travelling to very similar destination which may need more scrutiny if current global trade issues continue to rumble on.

Concerns over plantings of the 2020/21 crop have been subsiding over the recent weeks but ultimately the ‘carry out’ in each country will remain under the spotlight until there are more knowns about crop prospects than there currently are.

Cecilia Pryce, Openfield

A slight downward tweak in US wheat stocks in the recent monthly USDA report was offset by a small increase in forecasted global end-of season stocks.

Global wheat production was virtually unchanged, with lower expectations for Canada, Argentina and Australia offset by bigger EU, Russian and Chinese crops.

USDA raised US wheat exports, supported by the current strong export pace, although traders remain wary over the apparent lack of non-traditional export business gained so far this season.

However, higher export numbers are also expected from EU and Russia, keeping competition fierce into the second half of the marketing season.

About 8 per cent of the US corn crop is still to be harvested, just over 27.5mt, and the winter onslaught in the north may yet still affect final harvested acreage and production.

In summary, the USDA report did little to excite the market. Over the coming weeks it is likely that the wheat market will be interesting as the new year encourages producers to increase their selling activity amidst new crop weather issues in many parts of the northern hemisphere.

Wheat stocks remain heavy and a spark is needed to ignite the market. How much potential a much-reduced US corn crop will influence things remains to be seen.

David Woodland, ADM Agriculture

The USDA’s latest report published on Tuesday (December 10) had little effect on the soybean market as US stocks remained unchanged from the previous month's report. While global stocks were increased slightly, it wasn't enough to create any significant market movements.

In Europe this week, rapeseed prices traded at €399.75 which is the highest level since 2017. Analyst, Stratégie Grains, forecast the French 2020 crop to be 18.46mt. Although an increase from the 2019 season which represents a 13-year low, the figure is only 1.61mt higher, and so still remains below the usual long-term average.

In currency, as exit polls suggest a majority Conservative win on Thursday the strength of Sterling has counterbalanced the rise in European rapeseed prices for UK rapeseed. In the short-term, currency will be the main driver of UK values, particularly around the General Election and Brexit.

Andrew Hill, Frontier