With all the futures market trading within the same range that started back in mid-July there is a certain lack of direction in the wheat market. A combination of the weather, geopolitics and the wider macroeconomic uncertainty, make it a very difficult market to read.
The US and Canada are still seeing above average temperatures, which is aiding the spring wheat harvest, and it is a similar picture in Russia. Europe is seeing a few showers, but it is still very dry, which is becoming a bit of a concern for the winter planting of the 2023 crop. However, Australia is getting some good rain and could be setting itself up for another good year.
Meanwhile the export corridor in the Black Sea appears to be holding with Ukraine shipping 7m tonnes in the last two months, although wheat only made up a small percentage of the total. The bumper Russian harvest has made them more aggressive in the market so despite EU exports being up 25% compared to last year, more grain is switching from northern Europe to the Black Sea which has been reflected in the decline in Matif wheat futures.
High inflation
The fall in sterling, (300 pts in the last week) as the rate of inflation has started to rise faster than the Bank of England predicted, has meant that UK prices have been supported. Despite this drop there has not been enough movement in the UK’s competitiveness to encourage any demand. According to ADM, all in all trade may continue within the recent range for some considerable time.
Oilseed rape prices remain in the doldrums as, despite lack of farmer selling, crushers are convinced there is plentiful supply. Rapeseed yields in Northern Europe are well above average and both Australia and Canada should have plentiful crops.
Owen Cligg, trading manager United Oilseeds says: “There is also some oilseed rape coming from Ukraine via the Black Sea which adds to the increased supply. Biodiesel demand remains good, but the plentiful supply of rapeseed is outweighing the need for crushers to pay up.
“Dry weather continues to be an issue, but recent rains are encouraging some growers to plant rapeseed ahead of harvest 2023.
“Old crop prices are around £510 ex farm whilst new crop is currently a premium at around £520 ex farm.”
