|Wheat futures staged a recovery from multi-month lows as some of the supportive factors which we highlighted earlier in the week in our weekly grains report came into play.
These factors include doubts over a third renewal of the Black Sea grain export deal, stoked by claims of a Ukrainian drone attack on the Kremlin. Russia’s agreement to a rollover of the deal does not look as much of a formality as it did last time. This appears to be reflected in a drop to a little over 400Kt in the volume of Ukraine’s grain exports under the deal over the past week, the lowest total in six months.
Corn futures have also rebounded, albeit with their recovery, albeit with their recovery muted by the decent pace of US spring sowings of the grain, as well as by a continued hangover from Chinese washouts of orders of US corn exports. Total US corn export sales last week showed net cancellations of 195Kt, the worst performance on data going back to 1990.
The slide in oil prices has also overshadowed corn, which is used largely in making ethanol. Brent crude futures slumped by 9% in two sessions, amid worries over Chinese and US economic growth, before show their own late-week revival.
The oil price tumble has been a test too for oilseeds, given that vegetable oils are a key raw material for biodiesel plants.
However, oilseed futures have held up relatively well, having for soybeans reached levels in Brazil which are already raising questions over their inclusion in farmers’ 2023/24 sowings plans. Read more in our weekly oilseed outlook.
Paris rapeseed futures have held above their late-March lows, supported by continued doubts over dry weather in Canada’s Prairies as the canola sowings window there opens up.
Grain markets are also gearing up for the release by the USDA in its May Wasde report, on May 12, of its first full crop supply and demand forecasts for 2023/24, one of the major events of the sector’s annual calendar.
CRM will preview the Wasde in next week’s grain and oilseeds reports, and give full analysis of the USDA’s key forecasts after the briefing is released.
Chart of the week: from our Grains Report:
Brazil second corn crop production outlook: