Rains bring relief but nervousness in grain markets due to COVID-19 pandemic, US election also causing volatility
“There is also some nervousness in the markets regarding the ongoing coronavirus pandemic and the economic impact that further lockdown restricts could have on markets,” said the UK team of analysts.
The latest US crop progress report had maize harvested at 72% as of October 25, up from 60% the previous week and 38% at this time last year. US winter wheat conditions were also reported for the first time this season. With 41% good to excellent and 19% poor or very poor, this is the second worst ratings at the start of the season since 1995, found the grains and oilseeds market review.
On Thursday [October 29], the International Grains Council (IGC) cut global maize production for 2020/21 by 4Mt, to 1.156 bn tons. "This was to reflect dry conditions in the US, Ukraine and the EU."
Global wheat production for 2020/21 was marginally increased by 1Mt to 746Mt by the IGC.
Meanwhile, the key message from the MARS EU crop report last week was that rains across Europe in late September and early October provided mixed blessings, said the analysts.
"In some parts, they eased drought concerns, however, in other areas, it put a stop to the maize harvest or delayed the beginning of the autumn drilling campaign. This said, there is still a chance for the timely completion of autumn drilling, should we see favorable conditions in the coming weeks.”
Oilseed markets saw large declines over the week, noted the AHDB team.
“A long run of frequent Chinese purchases of US soybeans over the last couple of months saw soybean prices reach their highest level since July 2016 last Monday. However, as bearish news followed in the week, the Chicago soybeans Jan-21 contract fell 2.5% (US$10.0/t) from Monday to Friday to close at US$388.10/t on Friday [October 30].”
The US election is also bringing volatility to commodity markets, with dollar currency markets most likely to be affected in the immediate future, said the analysts.
They also noted the slow start to Brazilian soybean planting following dryness concerns disrupting schedules, causing bullish sentiment.
However, a return of some rainfall to fields across Brazil recently has curbed such sentiment, and planting pace has now increased, said the team.
“Reportedly some Brazilian states have made significant progress and are back to average planting levels – if this is confirmed it could provide further bearish sentiment. Rainfall levels will be an important watch point over the next few months, especially given the occurrence of a La Niña weather event.”