Market report - 27th November 2019

Delayed EU drilling campaign shapes global market values and crop forecasts

America's benchmark CBOT traded almost 16 cents firmer on Monday, mainly due to short covering ahead of this week's Thanksgiving holiday. There was also some spill over support from the EU where news of delayed drilling continues to filter through. The US corn harvest is now 84% complete with more heavy snow forecast for the long weekend. Despite this, a common theme continues to burden US wheat and corn prices in a distinct lack of price competitiveness on the global market. For wheat, Europe and the Black Sea continue to mop up the bulk of demand while for corn, cheaper cargoes from South America and Ukraine are the main competition. As such it's unlikely we will see any sustained rally in either until we see a fresh demand driver.

Matif wheat futures traded to a five-week high on Wednesday as charts and fundamentals both turned supportive. Slow farmer selling, pitched against heavy export campaigns out of France, Germany and the Black Sea, compounds reports from Monitoring Agricultural ResourceS (MARS) that the EU wheat acreage is in decline due to the recent wet weather.

Domestically, the picture remains very uncertain with planting surveys recognising the difficult drilling campaign in their latest figures. The Agriculture and Horticulture Development Board (AHDB) released its early bird survey results which forecasted a 9% reduction in wheat plantings, with current intentions of 1.645 million hectares. Furthermore, the adverse establishment and the higher-than-usual proportion of late sowing led Stratégie Grains to forecast a UK yield of 8.10t/ha. This would be 3% lower than the five-year average but we expect this figure to be revised as the crop progresses. 

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