Wheat prices in Chicago fell early last week on hopes that the latest round of peace talks between Russia and Ukraine is moving forward.
However, the attacks continued and the markets firmed mid-week. This decision was more moderate, in anticipation of USDA quarterly stocks and potential planting reports (released Thursday, March 31).
The May 22 contract ended the week $43.26/t lower at $361.71/t.
Wheat estimates were broadly in line with trade expectations, although a reduction in expected stocks provided some support. With the approach of the new week, the markets again show their nervousness.
Limited rail exports from Ukraine are struggling with backlogs, worsening an already strained situation. In addition, Kazakhstan plans to limit its grain and flour exports, following the ban on their shipments by Russia.
Global new crop corn markets have rebounded higher since the USDA potential plantings report. With an estimated area of 36.22 Mha, this represents a decline of 2.7% compared to the average commercial estimate. With rising input costs apparently pushing growers to prefer soybeans to corn, the reduction in acreage has exacerbated problems with the availability of new crops.
Although Ukraine has announced that spring planting is underway, it is still unclear how much will be devoted to maize, rather than oats, peas and barley.
The demand for bioethanol for corn also remains strong. The US administration is considering allowing summer sales of E15 and news also broke on March 23 that Brazil was lifting its 18% tariff on US ethanol imports through the end of the year .
UK feed wheat futures fell last week. The May 22 contract closed the week at £12.80/t, at £303.20/t. November 22 also slipped, down £10.00/t, to £258.55/t (Friday March 25 to Friday April 1).
Physical domestic prices followed this decline, with delivered feed wheat (Avonmouth, May 22 delivery) falling £4.00/t over the week to £312.00/t. However, trading would be muted as we head into the final quarter of the season. Concerns remain for the end of the season, should the new UK harvest be delayed. Trade also remains very weak for feed barley, as no price could be released last week.
Price declines were more subtle for bread wheat deliveries, with April deliveries in the North West down £2.50/t on the week to £362.00/t.
As the rapeseed supply and demand situation remains tight, underlying support will remain for the market. In particular, if Ukrainian sunflower plantations are reduced, oil demand could shift to rapeseed oil in the longer term.
Despite the relatively bearish reports from the USDA for soybeans, concerns over oil/oilseed supplies from the Black Sea could offer underlying support.
World oilseed markets remain relatively volatile. Last week, expected US quarterly inventory data and forward planting figures were released.
For soybeans, the reports were bearish and subsequently Chicago futures fell on Thursday and Friday. That said, the drop comes from historically high positions, so prices have remained relatively high year-to-date. March stocks were pegged at 52.56 Mt, 1.5% above trade estimates from a Refinitiv survey. Potential plantings were estimated at 36.81 Mha, some 2.5% above the average trade estimate.
The 2021/22 Brazilian soybean harvest was 75.8% complete as of March 26, compared to 69.8% last year (Conab). However, in Argentina, the harvest is only 4.4% complete and recent frosts may have hampered yield prospects, reducing prospects for the 2021/22 harvest.
Export sales from the United States appeared to slow with only 132.0Kt of 2021/22 soybeans sold (to China) last week, compared to 690.2Kt the previous week. There were also new crop sales in Mexico last week. That said, if export volumes pick up, we could see US equities tighten further as we approach the end of the year.
Oil markets saw downward moves last week. Brent crude oil (nearby) lost $16.26 a barrel from Friday to Friday, dragging Malaysian palm oil down with it. The benchmark contract (close +3) closed Friday at $1,322.72/t, the lowest since February 18.
However, in the EU, sunscreen oil supply shortages could offer support for other vegetable oils.
Despite the negative data on U.S. soybean plantings, concerns remain for the broader global oilseed complex. Ukrainian farmers are said to be planting spring crops and were ahead of spring 2021 last week.
However, it is unclear which crops are currently prioritized. Sunflower plantations influence world oilseed markets due to their relative importance. Ukrainian sunflower production accounts for around 30% of world production, but it is mainly grown in the center and east of the country.
Updates on sunflower plantations could help steer the market, as Ukraine’s sunscreen oil supply will also influence vegetable oil markets.
Old crop rapeseed futures in Paris followed the decline in broader oil and oilseed markets last week. However, the global supply
the picture remains tight for 2021/22. Grains Strategy reduced its estimate of EU27 rapeseed ending stocks in its latest report to 0.7Mt.
Despite lower oil prices (mentioned above), potential solar oil shortages are likely to shift EU demand towards rapeseed oil. Rapeseed oil is already in demand by the industrial sector and increased demand from the food industry will support rapeseed oil prices and therefore seed prices. – excellent condition. However, conditions have deteriorated somewhat since November, when 78% of the crop was rated as good to excellent.
New crop rapeseed prices have seen some support. The Paris November 22 rapeseed futures contract gained €15.25/t from Friday to Friday.
There is no weekly comparison for rapeseed delivered to Erith (November delivery), but quoted at £669.50/t, it is up £38.00/t from the previous fortnight. It’s also up 71% (£278.50/t) year-on-year.