Monday Market Briefing - 16th November 2020

Although December/January remain quiet periods for crop development (and therefore price volatility is generally low), there are some early concerns about potential winter-kill in Russia. The wheat crop was established into poor seedbeds, and has the potential to suffer if colder-than-normal temperatures persist.  However, Russian wheat planting this year is forecasted at 19 mln hectares, up 1 mln hectares from 2019 (which ended with a record wheat harvested area).

Cumulative soybean sales to China from the US are 28.5 mln MT – up by nearly 8 mln MT compared with this time last year. Global demand indications remain strong as countries including China, look to retain food security, even at higher nominal grain values. So it may seem odd that nearby demand for UK grains has fallen as flour millers and feed compounders have already sorted out their supply ahead of the Dec 31st Brexit deadline. Wheat imports for Sept 2020 were 337,000 MT, bringing the 3rd Quarter total to 709,000 MT, which was more than twice compared with the same period last season.  UK wheat demand now looks to the Spring to secure it’s next tranche of supply cover – with or without the possibility of EU import availability.

This reduction in spot demand should probably depress ex-farm values for the nearby positions, but post-Xmas markets for Jan-Jul 2021 remain very buoyant. Although a deal with the EU is perceived as likely, UK growers should continue to place barley into European markets for Nov & Dec to avoid any tariff implications.