Agribusiness News February 2025 – Cereals
31 January 2025U.S Tariff uncertainty
It has been a strong run for maize and soya prices while wheat markets are simply ‘followers’ for now. The focus is indeed very much on the South American weather and Trump’s decisions on tariffs that would directly affect the maize and soya markets. Wheat is in a ‘wait and see’ position as falling Black Sea supplies have not yet permeated through to stimulate EU export demand.
The USDA report in mid-January came in well below trader expectations for both maize and soybeans stocks. Major exporters of maize, Brazil, Argentina, Ukraine and the US are seemingly holding 13% less stock compared to last year. Having previously been expected to produce record crops, the reported tightening of stock took both maize and soybean prices strongly upward.
In South America, the markets were expecting the situation to improve however, Argentina remains dry and conversely, it is still raining in Central Brazil. In Argentina, January rainfall is now at the lowest levels in 30 years whilst in the Mato Grosso, the continuing rainfall means the soya harvest is the slowest since 2010. Therefore, we can expect further crop downgrades in Argentina and more planting delays in Brazil.
As the new United States leadership has yet to give any definition to import tariff levels; this has given hope that they will not apply the threatened 60% tax on Chinese imports, along with the 25% tax on imports from Canada and Mexico. Financial and commodity markets considered this first phase as bullish in the expectation that there will be a gradual implementation of tariffs, followed by negotiations. The very first US decisions have been bearish for the dollar, as President Trump tries to fight inflation and boost US crude oil production, and supportive for financial markets which are now all trading close to record levels.
Sterling weakens through January
Closer to home, EU wheat export demand (down 36% year on year) remains very sluggish despite falling Black Sea supplies. Russia and Ukraine will export at least 3Mt less wheat every month, from January through to June. This is significant and should logically attract more demand out of EU ports. The full effect is yet to kick in although European prices have started to firm. UK growers have, however, seen recent falls in nearly positions although Nov ’25 futures values are holding better, closing the month out at £193/t. As a backdrop to this, the value of the pound seems to have steadied from the declines seen through January around concerns over the Government’s borrowing and might now give some resistance to higher prices.
Barley, oilseeds and oats
From the start of the current marketing year, UK barley exports have been at a significantly low level, down 43% year on year. The key reason for this is falling demand from EU countries, on the back of stronger sterling and increased production in the EU. Slightly lower nitrogen levels in the domestic crop this season have also limited export potential in some cases. New crop markets continue to track futures one-for-one, with limited news to drive the feed barley market independently.
Rapeseed prices remain volatile as ever, now coming back from highs which has again slowed down farmer selling, especially here in the UK now that £450/t ex farm is no longer a possibility. The EUR:USD exchange is not helping EU prices as the recent strength in the Euro (due to dollar weakness) has been keeping prices pressured. Weather forecasts look positive in Europe for crop production, and the inverse into new crop now sits at £34/tonne with no concern over tightness so far.
Milling oat bid and offers remain wide apart with neither side pushing hard to compromise as millers are reporting to be covered for Q1 but some demand remaining for Q2 and Q3. Feed oat demand also remains minimal; with Spain reporting to be covered with recent imports. New crop prospects remain fair; however, spring crops still need to be planted before we gain a greater confidence in this year’s UK production.
Mark Bowsher-Gibbs, mark.bowsher-gibbs@sac.co.uk 07385 399 513
Indicative grain prices week ending 28/1/2025 Source: SAC//United oilseeds/Farmers weekly/AHDB)
£ per tonne | Basis | Feb ‘25 | May ’25 | Nov ’25 |
---|---|---|---|---|
Wheat | Ex farm Scotland | 200 | 205 | 194 |
Feed Barley | Ex farm Scotland | 168 | 170 | 171 |
Beans | Ex farm Scotland | 220 | ||
Oilseed Rape | Ex farm Scotland | 422 | 431 | 402 |
Milling oats | Ex farm Scotland | 215 |
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