June 01st

Market Report

Our market reports are opinion based and are not instructions to trade. You are responsible for your own trading decisions.

Last week London wheat saw significant gains; Nov20 was £4.65 higher and May21 £4.75 higher. So far this week, London wheat has opened lower and presently C.£2 down on the November 20 contract, possibly on the back of potential showers towards the end of the week. Whether we see the rain or not the market is nervous and will continue to react aggressively.

Sterling has firmed up against the US dollar over the last few days, GBP against the Euro is stronger today but has weakened over the last few days.

Matif milling wheat has not seen the same level of support as London wheat with a wetter forecast for the Black Sea region and Western Europe, as well as the lack of any real export demand. However French soft wheat crop ratings declined slightly last week to remain at their lowest since 2011 for the time of year, data from farm office FranceAgriMer showed, as weather turned dry again. For the week to May 25, 56% of soft wheat was rated good or excellent against 57% the previous week, FranceAgriMer said. That was the lowest score for the period since 2011 when the good/excellent score was just 24% at the time of a severe spring drought.

The European Commission made a sharp downward revision to its estimate for EU-27 common wheat production in the 2020/21 season, lowering the estimate to 121.5Mt from 125.8Mt last month, this represents a reduction of 7.1% in common wheat production Y/Y. German gross production is estimated at 22.1Mt (11.7% below five year average) compared to 22.9Mt, reflecting the less extensive damage to German wheat crops.

EU OSR forecast has again been cut, giving an estimated to 16.68MT, this will be the fifth time and the smallest crop since 2006/07. It is expected the demand, albeit reduced due to the coronavirus impact, will be largely covered by imports from the likes of Ukraine, Australia and Canada. Canada’s exportable volume to the EU may be limited by the concern of GMO regs.

US / China trade has become fractious due to US accusations, China have told their state buyers to hold off buying from the US.

The US is generally seeing good crop conditions, giving a bearish feel to prices. US weather forecast has very warm to hot temperatures in the Great Plains early this week and the warmth will expand into the Midwest for a while during mid-week, but temperatures may not be quite as hot as far to the north as once expected. Midwest will experience better late season planting conditions over the next two weeks and warm weather will promote aggressive crop development. Delta and southeastern states will see a favourable mix of rain and sunshine over the next couple of weeks

author: Joe Beardshaw