Keeping an eye on the grain market: October 18 update

European grain markets continue to focus on domestic issues. The ability to move commodities along rivers that are historically short of water continues to create its own frustrations.

Trade flows this year were never going to be easy, but every week seems to bring a new challenge. Much debate hangs on the domestic EU consumption this season, with consumers all looking at least cost formulations for cereals coupled with readily available soymeal.

The dry conditions across most of the EU also continues to create uncertainty over winter crop areas and condition. The weather will be key in the coming weeks. Will we get enough rain and continued mild conditions to get crops established or do temperatures drop dramatically and it remain dry?

This year’s ‘winter’ conditions could easily change the markets, especially in light of continued uncertainties in other countries around the world – both politically and agronomically.

Brussels export data continues to limp forward with obvious glitches which doesn’t help, but price is the most obvious issue be that wheat that looks relatively expensive versus other global exporters or the price of corn arriving into the EU.

The EU can’t live on imported corn alone but based on current prices it looks like it’s going to have a very good try this year, which ultimately could shock the wheat market later in the season.

Cecilia Pryce, Openfield

Mid-point through October and, especially in our part of the world, Russia continues to dominate the wheat export scene. However, with 18mt production decline over last season and a torrid early pace of exports, its available surplus will not last the season through.

This is why the Russian government, which is fearful of rising domestic food price inflation, is actively trying to slow down exports. As such, as the season progresses, alternative supplies will need to be found to meet the strong demand profile across N.Africa, the Middle East and Asia. Argentina tops this list of candidates, although her harvest will not be due until December and they will also not alone have the exportable surplus to match the strong global demand.

With Australia largely ‘out’ of the market, due to their ongoing drought and a much greater proportion of the French wheat surplus needed within the EU this season to fill the void left by the drought across Eastern Europe, it will be the USA that regional importers rely on later in the season.

Rupert Somerscales, ODA

Oilseed markets have been impacted by data from last week’s USDA World Agricultural Supply and Demand Estimates (WASDE) report and various weather events over the last week.

Currency is also adding an additional backdrop of uncertainty to UK pricing, as the Brexit negotiations continue without any firm decisions.

The USDA report showed the US soybean area revised lower which in turn reduced US production from 4.693 million bushels to 4.690m bushels. In the short term this supported markets, although there is no doubt that the US still has a very sizeable soybean crop. Extensive year end stocks are anticipated given the ongoing trade dispute with China.

This week, poor weather conditions in Iowa, Minnesota and the Dakotas have led to talks of possible yield and quality loss and this has in turn supported prices. Weather worries also continue in Canada, where canola crops are sitting frozen under heavy snow in Alberta and Saskatchewan.

Conversely, plantings of soybeans in Brazil are proceeding at a record pace, with 20 per cent of the crop already planted in good conditions.

Zoe Andrew, Frontier