What to watch: Oilseed markets continue to wait to see if the US and China can conclude their endlessly discussed trade deal
The UK market was in a state of confusion with Brexit rumbling on.
In the US, markets have been supported by weather premiums.
And European traders are increasingly turning their attention towards new crop.
Nov 19 LIFFE wheat futures closed on Thursday, April 4, at £146.75/tonne, a fall of £1.85/t on the week
The UK market continues to be in a state of confusion regarding our wheat crop size and Brexit.
As we enter the final quarter of the cropping year, there is no clarity on the UK wheat crop size.
Estimates vary, from Defra projecting an area equating to a 13.95 million-tonne crop, to the Basic Payment Scheme survey suggesting a 100,000-hectare reduction on Defra figures.
Farmer grain selling has slowed and land work - nutrition applications, crop protection, and spring drilling - has taken priority.
The UK exit from the European Union was set to happen last Friday, March 29 but with no agreement and no end in sight, foreign exchange markets remain extremely volatile.
Grain consumers are dormant, as their own customers do not want to make major purchasing decisions with Brexit unresolved.
New crop growing conditions look healthy, with timely rains this week. November 2019 London wheat futures remain below £150/tonne.
European grain markets have been trading in a relatively lacklustre fashion, with old crop Euronext wheat and maize futures trading around unchanged on week ago levels.
Rapeseed futures had a slightly more constructive week, climbing a couple of euros per tonne. Rapeseed crush margins are currently significantly more attractive than either soybeans or sunflower seed.
In contrast to wheat futures market movements, French cash wheat delivered to the Maghreb and Middle Eastern region declined sharply, making it produce the cheapest origin on a CIF basis.
Unsurprisingly, France currently has more than 850,000t wheat in its shipping line-up for the first week of April, which complements the 1.5 million tonne figure the previous week.
Traders are increasingly turning their attention towards new crop and are busily updating weather maps. Large parts of Eastern Europe are suffering from inadequate rainfall and this area will need to be carefully monitored in the weeks ahead.
Some farmers here are reportedly already cutting their grain yield expectations. Elsewhere on the continent, recent rains across Germany, UK and northern parts of France and Poland have helped to assuage fears that have been steadily building over the last few weeks. More beneficial and widespread rains are seen across the continent in the week ahead.
After posting fresh contract lows early in March, the US market has consolidated, mainly supported by weather premiums.
Melting snow and heavy rains have resulted in mass flooding. With the increasingly wet outlook, spring sowings will almost certainly be delayed.
Lower than expected US all-wheat sowing figures have also lent support, although the likelihood that ending stocks will increase due to the sluggish export programme (down 6% on the year) is negative.
Also negative are the ongoing trade issues between Canada and China, which has the trade talking up the potential of Canada’s spring wheat acreage.
EU prices steadied on the global rebound. However, a move to a four-week high for the euro and the potential for a sharp rebound in EU wheat production is providing resistance to further uplift.
Weather in general remains favourable, although the far eastern EU states, the Black Sea region and western Russia remain dry.
In summary, there are several weather issues for 2019 crops, but trade continues to focus on the US/China trade talks and whether US wheat will be included in the final deal.
The grain complex needs a spark to ignite markets. This may come from trade talks, or an escalation of weather issues, but the potential strong rebound in global wheat production for 2019 is currently enough to keep a lid on the market.
The global oilseed markets continue to wait to see if the US and China can conclude their endlessly discussed trade deal.
The signs this week seem more positive than they have for a while, but US soya would still need to be price competitive to write business, unless the deal is to give commodity away.
The current weather in the US is still causing concern over delayed planting, especially with the first weekly planting updates being published for soya as of next Monday, April 8.
The question over soil moistures, flooding and temperatures remains the concern but on the flip side, once the crop is drilled it should not be short of moisture for a while, which ironically could ultimately improve yields. Demand for global oilseeds also remains a big question.
The flexibility of consumers to switch between oil and meal types remains a focus, especially in light of political uncertainties affecting supply lines along with the final end consumers purchasing power and views on long-term sustainability and environmental impacts.
These issues could be more of a driver than many currently anticipate but, ultimately, the world's demand for oils and meals seems to be ever-increasing and supply is needed or prices can react quickly.
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