Latest values provide great opportunities for farmers with grain left to market

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  • 29 January 2021
Wheat Jan 2021 1 1140X526

Latest values provide great opportunities for farmers with grain left to market

Markets ignited with a range of bullish news as grain demand ramps up and supply concerns increase and the values we have seen in the first two weeks of the new year have provided brilliant opportunity for farmers with grain left to market, at levels which have not been seen in eight years, reports Grain Trader Claire Strachan.

Markets were fuelled by the latest USDA report, which resulted in all US commodities trading strongly up after London wheat closed.

The report, which had been expected to be bullish, certainly kept up with pre-report estimates, lowering global production 1Mt to 772.6Mt, with the main reductions coming from Argentina and China.

The news of an 8Mt reduction to US production, which led to US ending stocks brought to the lowest level they had seen in eight years, spurred a huge jump in CBOT levels – lifting wheat values as a result.

Cuts seen to South American production were modest in comparison, with 2.5Mt shaved off production levels across Argentina and Brazil. However, conditions remain dry and prompt a real cause for concern that production levels could be further decreased leading up to the harvest.

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In our previous report around Christmas time, we talked about the news coming from Russia who, at the time, had confirmed they would be setting in place export tariffs on wheat between February 15th and June 30th.

As time has progressed, further developments in the story will now see the tariff double as of March 1st. From this date, we will also see tariffs applied to barley and corn. The move made by the Russian Ag Ministry, in a bid to control domestic values in a rising market, is said to be ‘unlikely to have the desired effect’, as plenty cash-rich farmers are able to hold onto their stocks into the new season.

Additionally, it has been proposed a new crop floating tax rate could be applied into the new season. Overall, the recent developments have been successful in spurring on supply concerns and increasing world wheat values.

Back in the UK, we entered 2021 with a sigh of relief that an EU trade deal was in place, allowing the free movement of pure, single origin commodities, meaning the UK’s need to import could be satisfied tariff free.

Just before Christmas, Defra revised the UK’s 2020 wheat crop lower, down to 9.66Mt – more in line with where the trade had estimated earlier in the season.

Many had expected Sterling to recover following the news of the trade deal between the UK and EU. However, the implementation of the third national lockdown has so far this year pressured currency. Looking forward to the new crop, we still anticipate a crop size closer to our five-year average, with current estimates ranging around 15Mt.

So, what’s in store for the remainder of the season? With Russian exports being taken off the cards, this has pushed other origin wheat prices higher, highlighting tighter supplies and likely to keep levels supported for the near future.

Prospects for the EU-28 wheat production in comparison with last year are more in line with usual output, which should help export supply should Russia confirm a floating tax rate into the new season.

Attention will remain on import demand coming from the major buyers, with combined sales of over 3Mt of US corn to China boosting values this week, the market will be reactive to fresh export trade.

With beneficial rain returning to South America, we have seen prices relax. Going forward, the market will be watching how harvests across Brazil and Argentina progress and, additionally, attention will now focus on conditions in the northern hemisphere.

If you want to discuss wheat marketing options, please do not hesitate to get in touch with us via email by contacting

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