The Agriculture and Horticulture Development Board (AHDB) has published an international grain and oilseeds market update.
The organisation is confirming that global grain prices generally came under slight pressure last week.
However, volatility remains a factor as the market approaches the March 19 deadline, set for the Black Sea Initiative renewal.
In addition, the ongoing drought in Argentina capped any major losses in grain markets last week.
Grain markets
Chicago wheat and Paris wheat markets fell 1.8% and 1.7% respectively over the week as expectations that the deal in the Black Sea region to export grain from Ukraine will be extended.
The Turkish Foreign Minister indicated on Monday of this week that Ankara is working hard to extend the UN-brokered grain deal, though Russia has signalled it is unhappy with certain aspects of the agreement.
Any news surrounding the deal will be a key driver in global grain markets over the next couple of weeks, according to the AHDB.
Ukraine’s Academy of Agricultural Science has confirmed that between 92% and 97% (depending on the predecessor and sowing date) of its winter wheat crop was in relatively good condition.
Ukraine’s wheat harvest declined to 20.2Mt in 2022, from 32.2Mt in 2021.
According to an official from Ukraine’s Agriculture Ministry, next harvest’s estimate is currently expected to be between 16Mt and 18Mt, though Ukraine currently does not see a need to limit wheat exports next season (2023/2024).
Weather in Argentina remains a watch point moving forward.
In its latest report released at the end of last week, the Buenos Aires Grain Exchange reported 6% of the maize crop as being in excellent/good condition, down from 9% the previous week.
While production estimates have already been slashed over the season so far, sources in that country have said they believe estimates could be cut further in the coming weeks.
While there is some rain forecast in Argentina over the next seven days, it will still be minimal in the key producing region.
Oilseeds
Turning to oilseeds, AHDB is confirming that the Chicago soya bean futures prices (May-23) were only marginally pressurised for most of last week. They closed at $557.99/t.
There was quite a bit of volatility as the contract dropped to the lowest price since the start of January on Tuesday (February 28), from the Brazilian soya bean harvest pressure and as commodity funds liquidated positions before the end of the month.
According to Brazilian agricultural consultancy AgRural, the country’s soya bean harvest, as of last week, is estimated to be 43% complete, progressing 10% from the previous week. This is one of the weighing factors on the oilseed complex currently.
However, there was support at the end of the week, as concerns over Argentinian weather ignited strength for soya beans.
As the crop enters the latter stages of its development, drought continues to impact. Buenos Aires Grain Exchange announced last week that there will be further cuts to Argentina’s soya bean crop from drought impact.
Currently, the Exchange forecasts the crop at 33.5Mt, down from the 48Mt estimated at the start of the cropping cycle.
USDA
According to AHDB, all eyes will be on the latest US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates, due later this week.
Analysts expect the USDA to lower Argentina’s soya bean crop by 4.35Mt, which will peg the crop at 36.65Mt.
This is still higher than Argentinian consultancies. Other than that, changes to the US ending stocks of soya beans are expected to marginally decrease.
Over the next week, Argentinian weather will be a market driver. Rains are expected in the northern agricultural region of the country.
The market has, to some extent, priced in Buenos Aires Grain Exchange’s unannounced revision from 33.5Mt.
However, if this tweaking of the figures comes in at a higher than expected level, this will further drive the soya bean market up.