Covid-19 continues to influence global demand
Last Thursday saw the latest United States Department of Agriculture (USDA) report published. Very little changed on the supply side but it did lower demand, therefore raising end stocks for the season globally. This is due to the impact of Covid-19 on global demand and is bearish for the wheat market.
Maize was seen by the USDA as similar to wheat. Supply was up by one million tonnes and demand down by five million tonnes; mostly attributed to US corn for ethanol production which has dramatically fallen in recent weeks.
The major supportive factor for the market has been the prolonged dry weather affecting the Black Sea region as well as Europe. However, snow and rain is now forecast for Ukraine and Southern Russia, with low temperatures set to follow this extended dry period. The Russian Agricultural Ministry sees crops at 94% satisfactory, while Ukraine sees them as 90% satisfactory or good. Agricultural consultancy, SovEcon still have the 2020 Russian wheat crop at a near-record 84.4 million tonnes, but it will need rain to get near that production figure.
Romania announced it would ban wheat exports to countries outside the EU until at least mid-May, highlighting ongoing issues due to Covid-19.
On physical trade, Egypt bought two cargos (60kt each) of Russian wheat for May delivery, at an average price of $251 which is $12 above its previous tender held in February. Russian domestic prices are at new highs and its export quota is rapidly disappearing. The French offers were above these prices, seemingly nervous of supply, with EU wheat exports jumping almost two million tonnes on last week to 26.7 million tonnes. This is compared to 15.9 million tonnes at this time last year.
Manage your risk while markets are volatile – Frontier pools closing 17th April
Pools offer a sensible grain marketing strategy during a time where prices are being influenced considerably by a range of factors.
With the Covid-19 pandemic still impacting trade around the world, grain prices remain volatile. The Frontier pools are the ideal vehicle to help growers manage their risk and, with spring drilling completed by many in good time following the dry weather, now is a sensible time to consider available end markets for your growing crop. This is especially true for spring barley; with a record crop looking likely this season.
For more than 15 years, Frontier has achieved positive results for growers across all commodities and our financial stability means that we can offer our customers the confidence both of market access and being paid on a guaranteed date.
If you would like to commit a proportion of your 2020 crop to a Frontier pool before the closing date, please speak to your Frontier farm trader who will be able to help you select the pool and payment options that best suit you. You can also find more information on our website.