Market Report - 21 March 2022

Wheat

Maize

Barley

Wheat markets continue to fluctuate and follow news on the war between Russia and Ukraine. Longer term, the market awaits news on the size of major exporter’s new crops, and how much will be available from the Black Sea region next season.

Currently there is disruption in trade, with demand switching from Ukrainian to other origins. US export sales remain strong. Longer term, Brazilian plantings are progressing with no new major weather concerns currently.

Barley continues to track the wider grain market. Though with a tight supply and demand balance this season, barley may not be able to take further shifts in demand.

Global grain markets continue to react to news on the war between Russia and Ukraine, causing volatility in prices. On Friday, peace negotiations pressured prices across the board. Volatility is expected to continue in the near term. Though the fundamental picture for global grains continues to look tight, keeping prices at historical highs.

Last week, the International Grains Council (IGC) reduced their global trade projections for wheat (down 3.0Mt) and maize (down 6.0Mt) for this season due to the conflict between Russia and Ukraine. With high prices, demand rationing is expected too. Large cuts were made to Ukraine’s maize exports (down 10.8Mt).

As at mid-March, most of Russia’s ports were reportedly operational. Though there are some restrictions on the Azov Sea, as well as financial restrictions (IGC).

Looking to new season, focus increasingly looks to drought in the US southern Great Plains and what this may mean for US winter wheat. Despite an ongoing wet spell, most of April is forecasted dry (Refinitiv).

USDA export sales were mixed to the week ending 10 March. US net sales for wheat totalled 145.9Kt for 2021/22, primarily to Colombia and Mexico. This was below trade expectations and may be a sign of demand rationing. Whereas US maize exports totalled 1.84Mt for 2021/22, primarily to Japan and unknown destinations. For 2022/23, net sales were made of 204.0Kt to China. Both above trade expectations.

UK feed wheat futures (May-22) saw volatility last week, following global market reactions to the Russian and Ukrainian conflict. The contract closed on Friday at £293.00/t, down £5.00/t from last Friday after some gains mid-week. There were relatively low volumes of contracts traded last week, with such high prices.

New-crop UK wheat futures (Nov-22) closed on Friday at £250.00/t, down £0.50/t week on week. Though volatility saw prices close at £255.00/t on Tuesday. The contract is trading up at £255.50/t today (13:00 GMT).

UK delivered prices followed futures movements (Thurs to Thurs). Feed wheat into East Anglia (March delivery) increased £6.50/t to be quoted at £300.00/t. New crop (Nov-22) was quoted at £251.00/t for this location.

New-crop bread wheat prices were also available last week. Northamptonshire bread wheat (for Nov-22 delivery) was quoted at £290.50/t.

Rapeseed

Soyabeans

For 2021/22 global rapeseed supplies are tight. For next season, the size of oilseed crops will be key to sentiment going forward. This includes Ukraine’s planting progression of their sunflower crop.

Short term some Brazilian states near harvest completion, boosting available supplies. However, harvest is only just commencing in Rio Grande do Sul (the state impacted by the drought). Longer term, next week’s US planting data will set sentiment for 2022/23 marketing year.

Volatility persists in oilseeds markets as the Ukraine-Russia war continues. Markets over the past week have been assessing how long this conflict will last.

The oilseed complex saw pressure across the week, shadowing pressure in crude and soy oil. Chicago soyabeans futures (May-22) closed down 0.48% across the week, at $612.82/t on Friday.

Over the weekend, Argentina’s government announced an increased export tax rate on soy oil and meal until the end of the year. This export tax rate has been increased from 31% to 33% to combat food inflation.

Furthermore, the Rosario Grain Exchange’s latest report announced that Argentina could face a third successive La Niña weather phenomenon this year. This could impact the 2022/23 grain and oilseed production.

Malaysian palm oil futures (Jun-22) dropped 16.07% (1,078 MYR) across the week. This came as key global producer Indonesia abandoned restricted volumes on exports, increasing global supplies. This outweighed news of Indonesia increasing their maximum palm oil export levy.

Latest data showed that Malaysia’s palm oil exports in March fell from a month earlier. From 1 - 20 March, exports fell 8.4% to 755.98Kt from 825.19Kt shipped during 1 - 20 February (according to Intertek Testing Services).

Paris rapeseed futures (Aug-22) closed Friday at €753.00/t, down €6.00/t across the week. Following market movements, UK delivered rapeseed (into Erith, Aug-22) was quoted Friday at £625.50/t. This is down £8.50/t across the week.

In foreign exchange, sterling weakened (-0.2%) against the Euro across to week. Closing Friday trade at £1 = €1.1919.

Please note that Friday’s delivered rapeseed survey was conducted around mid-morning therefore price movements may not reflect futures market close due to the rapidly changing market.

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