Midweek market update: Grain market daily

• UK feed wheat futures (May-25) rose by £0.15/t yesterday, closing at £176.55/t, while the new crop contract (Nov-25) fell by £0.05/t to £191.45/t.
• UK wheat futures (old crop) diverged from Chicago and Paris prices yesterday. Chicago wheat dropped due to the USDA's report of higher-than-expected world ending stocks and ongoing trade tariff uncertainty, while Paris milling wheat was mainly pressured by a stronger euro.
• May-25 Paris rapeseed futures dropped €1.75/t to €480.00/t, with the Nov-25 contract down €2.00/t to €467.75/t.
• EU rapeseed markets faced pressure from falling Canadian canola prices, driven by new Chinese tariffs on Canadian canola oil and meal, read more on this below. Winnipeg canola futures (May-25) were down 2%.

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In this mid-week update, we dive into two key factors driving global grain and oilseed markets at the moment, and their impact on domestic prices.

Trade tensions and tariffs

Ongoing US tariff hikes on imports from Canada, Mexico, and China have had a significant impact on grain and oilseed prices. Chicago wheat and maize futures (May-25) have each dropped by 6% over the past month, while Chicago soyabean futures (May-25) fell by 5% over the same period.

A postponement of tariffs on Canadian and Mexican goods announced on 6 March, offers temporary relief. However, uncertainty remains as China has already imposed countermeasures, and Canada and Mexico are reportedly preparing their own retaliatory tariffs.

On Saturday, China introduced a 100% tariff on Canadian rapeseed oil and meal imports, adding further volatility to the market, as China is a major buyer of Canadian rapeseed meal. In 2024, China imported 2.0 Mt of rapeseed meal from Canada, making it the second-largest buyer. This has put significant pressure on Winnipeg canola futures which has filtered through to the wider vegetable oil complex.

USDA March WASDE report

The USDA's March WASDE report was largely as anticipated for maize and soyabeans but showed a larger-than-expected rise in global wheat ending stocks, driven by higher supplies and reduced global demand. Wheat crop estimates rose by 2.1 Mt in Australia, 0.8 Mt in Argentina and 0.5 Mt in Ukraine, while the global export figure was revised down by 0.9 Mt.

World soybean ending stocks fell to 121.4 Mt due to higher crush estimates. This is down 2.9 Mt from February, but 0.2 Mt above analyst expectations. Global maize stocks were cut by 1.4 Mt to 288.9 Mt compared to the average trade estimate of 289.9 Mt.

It is important to note that the USDA's report at this point will not take into account trade policy changes, such as the suspension of US tariffs on Canada and Mexico until 2 April and China's 100% tariff on Canadian rapeseed oil and meal. As such, once tariffs are fully imposed, we could see some further change in the coming months figures.

Summary

Uncertainty over trade policies will continue to significantly impact global and domestic prices. The USDA report, not factoring in recent tariff developments adds another layer of market volatility. Any developments regarding US trade flows remain a key focus in the coming weeks, as any updates could sway prices.

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