Farmers Guardian
Topics
How to spot BSE and what farmers can do to prevent it

How to spot BSE and what farmers can do to prevent it

DataHub

DataHub

Dairy Farmer Magazine

Dairy Farmer Magazine

Auction Finder

Auction Finder

British Farming Awards

British Farming Awards

CropTec

CropTec

LAMMA 2020

LAMMA 2020

You are viewing your 1 free article

Register now to receive 2 free articles every 7 days or subscribe for unlimited access.

Subscribe | Register

An eye on the grain market - May 30 update

What to watch: A record US corn Prevent Plant area is more than likely following ongoing heavy rains.

TwitterFacebook
TwitterFacebook
Share This

An eye on the grain market - May 30 update

Corn planting progress is at a record low following adverse wet weather.

 

The US Government has announced its farm aid package will not be crop specific to avoid incentivising farmers to select one crop over another.

 

And this week saw new contract lows for global wheat markets.

Nov-19 LIFFE wheat futures closed on Wednesday, May 29, at £155.50, a rise of £6.95/t on the week
Nov-19 LIFFE wheat futures closed on Wednesday, May 29, at £155.50, a rise of £6.95/t on the week

UK - UK growers take advantage of market surge

UK - UK growers take advantage of market surge

Two and a half weeks in the grain trade can seem an awful long time. On May 13, global wheat markets, including London, set new contract lows as Nov-19 traded down to £139.50.

 

Since then the markets have been rocked by a US fund-led rally, as weather delays to US corn and soyabean sowings produced large bouts of short-covering, with spill-over support for wheat.

 

The scale of the rally, worth £20/tonne on UK new crop, has provided an opportunity for growers. Many have taken advantage and increased their selling activity on both 2019 and 2020 crops.

 

Prior to the sharp rally, the UK market, like others, was suffering from a general lack of interest. The increase in cheaper maize imports, now put at over 2.1 million tonnes, was seen eating into domestic wheat demand for industrial and feed use.

 

In addition, prospects of a large rebound in UK wheat production had kept the lid on any potential new crop rallies, while old crop supplies were perceived as plentiful.

 

The underlying bearish outlook for wheat still stands. Current weather conditions in the UK would still support a larger 2019 wheat crop, as in the EU, Russia and other major producers.

 

David Woodland, ADM Agriculture


European - Prices rise as corn planting remains low

European - Prices rise as corn planting remains low

As well as global markets, European wheat prices have continued to rise on the back of the US corn planting pace.

 

Currently the single market driver, corn-planting progress is now at a record low following adverse wet weather. Crops planted at this late stage lose yield potential, with some at risk of not being planted at all.

 

Last night, the United States Department of Agriculture (USDA) published the latest weekly crop data and put corn planting at only 58 per cent complete – well behind trader expectations of 63 per cent. This was up from 49 per cent the previous week but, at the same point last year, there was 90 per cent planted in line with the five-year average.

 

In their first estimates made earlier this month for 2019/ 2020 the USDA saw US farmers planting almost 93 million acres of corn, up by 3.7 million acres on the previous year. With yield slightly down from 2018, they put the total crop over 281mt. Now, as 42 per cent of the crop remains to be planted, this represents 160mt of corn at risk and – potentially – a significant loss to the world’s grain balance sheets.

 

Although US farmers can plant up to 10 per cent of the crop in a day, they need the appropriate soil conditions and weather to allow it. Close attention will certainly be paid to the coming weather forecasts.

 

In the meantime, the speculative funds have all but bought back the record short position they had established in CBOT corn futures earlier this year, covering 300,000 contracts since May 10. This move has taken that market to a three-year high and helped move new crop UK wheat prices £30/t up from the lows hit just two weeks ago.

 

Simon Ingle, Frontier Agriculture


Global - Grains rally further on record US spring planting delays

Global - Grains rally further on record US spring planting delays

The rally continued this week across the grain markets amid historical delays in US spring plantings although paused yesterday after a staggering 20 per cent jump in Dec-19 CBOT corn prices since mid-May.

 

US farmers have now been enduring ongoing heavy rains for weeks since the beginning of the spring across the Midwest. As such, a record US corn Prevent Plant area is more than likely, although the USDA will be slow in lowering its US corn planted area in its monthly WASDE report.

 

The forecast continues to favour wet conditions in the central part of the US and the Midwest, at least until June 4 which will now result in a decline in yield potential, projected at 176bu/ac or just 0.4bu/ac below last year by the US agency.

 

As of May 26, only 58 per cent of the US corn crop was planted, i.e. down 32 per cent on last year and the five-year average. Across the key of states of the Midwest such as Illinois and Indiana, plantings are respectively down 60 per cent and 63 per cent on the five-year average.

 

According to trade sources, the combination of reduced acreage and below average yield could already result in a 10-12 per cent loss in 2019 US corn production or more than 40 million tonnes. Consequently, the funds which were holding a record net short position (i.e. bearish in price) of more than 320,000 lots on CBOT corn just five weeks ago got scared and, since then, they have bought a record amount of corn over the same period: more than 190,000 contracts, yet they remained net short of more than 116,000 contracts as of the week ending May 26.

 

US corn is now trading at its highest level since June 2016, which coincides with a technical resistance level.

 

Until the Midwest weather improves, the US could well offer support to the world markets although, like any rally in price, phases of consolidation will occur.

 

Benjamin Bodart, CRM AgriCommodities


Oilseeds - Oilseed prices spike on US weather concerns

Oilseeds - Oilseed prices spike on US weather concerns

New crop US soyabean futures have seen impressive gains during May. In the last week the Nov-19 contract added a further 50c/bu, to currently trade above $9/bu again for the first time since late April.

 

These gains now stack-up to more than $1/bu above the recent contract lows set on May 13.

 

The market remains focused on the adverse US Midwest planting conditions for both corn and soyabeans and the trio of questions regarding how much of the land due to be drilled with soybeans will actually get planted, what negative yield impact will late-sown crops have and whether or not farmers will simply not plant anything and take their crop insurance instead? Friday’s Commitment of Traders report, alongside Monday’s NASS Planting Progress and Crop Conditions report, will be key in determining if the current price rally has further legs.

 

A fresh government farm aid package has recently been announced but, crucially, the package will not be crop specific, to avoid incentivising farmers to select one crop over another and distorting markets.

 

European rapeseed markets are witnessing spillover support from the ongoing planting drama in the US with the Nov-19 contract having added €15/t in the last fortnight. Our regional markets will likely soon refocus on what are generally poor European rapeseed crop prospects.

 

Rupert Somerscales, ODA UK

TwitterFacebook
Post a Comment
To see comments and join in the conversation please log in.

Most Recent

Facebook
Twitter
RSS
Facebook
Twitter
RSS