Demand continues to remain strong in the feed market, however with competition from imported maize and other feed ingredients, the market remains very competitive for native grains. Due to the higher domestic supply of barley this season the gap between spot wheat and barley has moved up to €20/t.
Due to the limited amount of planting and poor prices there has been little interest in forward selling. In relation to malting barley, Boor malt recently have offered a forward sell of €180/t for green crop next harvest.
Irish Native / Import Dried Prices
|Spot €/t||Jan 2020 €/t|
The big news in the market has been the agreement of a phase one deal between China and the US after their protracted trade war. There is no concrete information on the exact details of the deal however the US are saying that China is projected to import $32 billion of US agricultural products per annum in the next two years which would be significantly above its previous high of $24 billion in 2017.
Chicago wheat futures jumped dramatically on the news while the Motif March contract jumped to a high of €187/t. News that the new Argentine government has increased export taxes on grains and soybeans by approx. 5%, has also contributed to the recent bullish sentiment.
These recent news events have come against a background where potential wheat production is seen as being reduced in Northwest Europe due to wet sowing conditions, and in Eastern Europe/Ukraine due to excessively dry planting conditions.
In its first sowing estimates for 2020, the French Farm Ministry estimates the country’s winter soft wheat area for the harvest at 4.73 million hectares, down 4.8% compared with this year. This figure is 5.6% below the average of the past five years. Reports from Germany suggest that the winter wheat sown area for the 2020 harvest has been reduced by 7.1% from 2019.
The continuation of the wet conditions throughout November, has ensured there were few further opportunities to plant Winter crops. Some areas in the East and South east have received up to twice the annual rainfall for October and November which will lead to loses in the crops which were planted. This will have significant implications for the availability of wheaten straw in particular next harvest. Many are now considering planting Winter wheat in January/February if conditions allow.
According to Eurostat figures, Ireland has imported 255,000 tonnes of Maize from third countries outside the EU since the marketing season started in July. The majority of the imports were GM maize from Brazil. This figure is 82,000 tonnes down from the same period last year however, it is still a huge figure considering the favourable domestic grass growing season and extra availability of native grains.
There have been some forward prices offered for green barley at €140/t, however, with the price on the low side and the lack of Winter barley plantings, few will be considering these offers for the moment.
Irish Native / Import Dried Prices
|Spot €/t||Jan 2020 €/t|
The Dec 2019 Matif wheat contract, is now trading at €186/t, a major change from the low of €165/t during September. This increase in the futures price has been driven by the reduced Winter plantings in the UK and France as a result of the wet weather experienced in North western Europe. Chicago wheat futures have also jumped in tandem with European prices however some of this is being attributed to technical moves and covering of short positions.
Black sea wheat prices remain strong however Russian wheat production is up 7 million tonnes on last year and they also have increased their Winter cropping area by 4% compared to 2019.This may more than account for the potential reduction in the EU planted area, and may cancel out the potential reduction in the European area.
With the greater potential for EU wheat production being reduced compared to barley, we are seeing some divergence in the market between wheat and barley. The market is assuming that framers will plant more Spring barley crops in 2020 in order to compensate for the inability to plant wheat etc.
Corn (Maize) futures rose in tandem with wheat towards the end of last week as sales of US corn increased and snowfall in the north mid-west of the US is causing problems with finishing the corn harvest. Increased internal demand in Brazil from ethanol and livestock producers has also being positive for future prices.
Rapeseed futures continue to remain robust however soybean prices have fallen significantly in the past week due to continued uncertainty in US/China trade talks, and the potential for increased production from south America in 2020. The EU continues to be over dependent on imported protein crops with the block increasing soymeal imports by 15% compared to last year.
The continuation of the wet weather has left the planting of winter crops very difficult. The window for planting Winter barley and oats has virtually closed although some will still plant Winter wheat if the weather allows. Some estimates suggest that total Winter plantings of the 3 main grain crops could be as low as 110,000 ha, which would even be lower than the 2018 winter crop figure of 120,000ha.
Due to the wet October, animals have been housed earlier than last year, which has led to an increased demand for feedstuffs. Due to competitive pricing and issues with the quality of imported maize during the year the proportion of Irish grains used in feed rations has increased, which has led to good demand.
Most merchants have now issued prices for harvested grain, with green barley in excess of €140/t and green wheat approximately €10/t higher. Market prices were probably at their lowest around harvest time but have since increased and that augurs well for those farmers storing grain for future sale.
Irish Native/Import Dried Prices
|Spot €/t||Nov 2019 €/t|
A combination of factors has helped European wheat prices to reach a 3-month high, with the Dec 2019 Matif wheat contract now trading at €181/t , significantly off the low of €164 /t seen in mid-September. The cereal harvests in the southern hemisphere countries of Australia and Argentina have been further downgraded due to drought, with the Australia harvest estimate for wheat now at 15.5m tonnes from a previous figure of 19m tonnes. On the sowing front, recent news that Winter Wheat plantings in the Ukraine will be reduced has proved positive for the market.
The rise in the price of Black sea grains along with an increasing number of tenders from importing countries in north Africa and the middle east, has added to overall price support in the wheat and barley markets. However, wet and cool conditions in the mid-west of the US have again been the main focus of the market, with US wheat driven higher by the delay in the US Spring wheat and maize harvest.
Corn (Maize) futures have continued to trade based on the final outcome of the US harvest. Snow and wintry weather in states such as North Dakota have certainly cast doubt over the predicted final maize yield. The corn harvest is now 30% complete in the US, against the 5-year average of 47%. It now seems likely that favourable weather during the growing season could not outweigh some of the earlier problems of high moisture during planting and the resulting late harvest. However, poor export demand for US demand is keeping a lid on US futures as importers source maize elsewhere.
Some positive signals from the US/China trade dispute such as tariff rate free quotas for US soybeans have boosted the soybean market, however there still appears to be ample supplies available from the South American countries.The soybean harvest in the US is now 45% complete, versus 64% on the 5 year average, with an expected reduction in yield now also factored in. Other commodities in this space such as rapeseed and palm oil have also risen in tandem with the bullish soybean market.
IFA National Potato Chairman Thomas McKeown has warned that there is a severe risk that much of the potato crop will not be harvested if the wet weather continues.