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Market Report - 29 June 2020, 30.06.20

This week's view of grain and oilseed markets, including a summary of both UK and global activity.



Downgrades to the EU crop are being more than offset elsewhere and the expected global surplus is creeping higher. Although, major exporter stocks are expected to drop year on year, this only really becomes a factor if supplies are disrupted.


We’re still on course for large maize crops around the world and US ethanol demand is not expected to reach ‘normal’ levels for a while yet. This would keep the market well supplied into the autumn at least and pressure on prices.


Global supplies are still expected to exceed demand, and barley will have to compete for feed demand against maize. For the UK, the need to export will keep prices subdued relative to other grains through the autumn.

Global grain markets

Global grain prices fell last week amid upgraded crop forecasts, plus harvest pressure and worries about the rate of coronavirus infection in parts of the US. There was also pressure from speculative traders as they had extended their ‘short’ positions in Chicago futures as at 23 June.

Global grain futures

EU-27 wheat production was cut sharply (-4.3Mt) to 117.2Mt by the EU Commission and is now 7% below average. Barley production was unchanged with harvesting underway in France, while the maize harvest prediction increased by 0.5Mt.

However, the International Grains Council (IGC) forecast 2020/21 world wheat production at 768Mt (762Mt 2019/20). This is up 2Mt from the previous estimate as increases in China and Australia offset lower EU production, adding to the view of well supplied markets.

Maize crops in the US and France continue to look good, supporting the view that global maize production could be high in 2020/21. The IGC pegged the global crop at 1,172Mt, higher than its last estimate of 1,169Mt. US yields depend on weather over the next few weeks so watch condition scores as the fortunes of the crop could impact on UK wheat prices.

The threat of Russian export quotas from 1 January 2021 could mean exports are more front-loaded than recent years and add pressure to prices in the early part of the season. As we mentioned last week, the Russian wheat crop forecast was increased by 2% to 79.5Mt by IKAR.

Important information out this week: Canadian crop areas and US crop conditions later today, US Acreage report on Tuesday night.

Revision: Last week’s Market Report (22 June) suggested that 'US ethanol stocks continue to set new records'; this is incorrect as ethanol stocks have shown a strong decline for the past 9 weeks.

UK focus

Nov-20 UK feed wheat futures closed at ?163.00/t on Friday, down ?2.85/t from 19 June and the lowest price since 6 May. Delivered wheat prices as at Thursday’s close were also down from 18 June. NW bread wheat for November delivery was reported at a premium of ?39.85/t to Nov-20 futures, down from ?42.50/t on 18 June.

Delivered cereals

Meanwhile, harvest delivery feed barley in East Anglia was up slightly week on week. As David highlighted on Friday, feed barley prices are likely to face greater harvest pressure in August this year, rather than July given the amount of spring barley planted. Historically, prices typically pick up a bit into the autumn but this year the need to export will likely keep markets pressured into 2021.


Oilseed Rape

Although domestically our supply looks bleak, there is still plentiful supplies of rapeseed and other edible oils around the world, which will keep the market pressured over the coming months.


There is a well-supplied soyabean market as we enter the next marketing year. With favourable weather conditions in the US, we are likely to see the market feel pressure as we enter northern hemisphere harvests.

Global oilseed markets

US soyabeans futures (Nov-20) closed Friday at $316.46/t, down $7.17/t on 19 June. This contract has been pressured across the week due to favourable rains across the US Midwest, limiting stress on crops.

Global oilseed futures

Chicago soyoil futures (Dec-20) tracked the weakness in soyabeans to close Friday at $619.06/t, down $27.12/t across the week. Falls in energy markets added to the pressure as Brent crude oil futures (nearby) closed Friday at $41.02/barrel, down 2.8% across the week.

Latest palm oil data shows that Malaysian exports in May dropped over 25% year-on-year. Malaysian palm oil futures (Sep-20) reduced by 4.2% across the week, tracking a weaker oilseed market and fears of a second wave of the coronavirus pandemic that could curb demand for palm oil.

Canadian canola futures (Nov-20) were pressured across the week, to close Friday at CA$468.50/t, down CA$9.60/t across the week. Successful crop progression and no major concerns about the Canadian crop have pressured prices lower. Statistics Canada is scheduled to release its final report later today on the planted area in Canada; an increase in canola area is anticipated.

Rapeseed focus

Paris rapeseed futures (Aug-20) closed Friday at €374.25/t, down €6.00/t across the week. Delivered rapeseed (harvest into Liverpool) was quoted at ?336.00/t, down ?2.00/t on the week before.

UK delivered oilseed prices

The domestic market has been partly sheltered from the drop in global oilseed markets as sterling weakened by 0.54% against the euro across the week to close at ?1 = €1.099 on Friday.

Consultancy Strat?gie Grains lowered its forecast for the 2020 EU +UK rapeseed crop. It is now estimated at 16.54Mt compared to 16.66Mt in May’s report. There has been successive reductions to the EU crop due to dry spring weather and pest damage. It is expected that this year’s harvest will fall below last year’s poor crop.

All viewing: 117

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