In early August, the US Department of Agriculture (USDA) released its estimates for US crop production this season, which suggested the country was headed for record corn (maize) and soyabean harvests.

The USDA is forecasting an 11% year-on-year increase in US corn production to a massive 385m tonnes, while soyabean production is forecast to increase 3% from 2015 levels to more than 110m tonnes. However, in the aftermath of the report, grain prices traded in Chicago appeared to defy gravity and actually rose, despite this massive production outlook.

This week, the influential ProFarmer crop tour is under way in the main grain-producing states of the US and the findings so far suggest the US corn yields this harvest may actually be less than currently forecast by the USDA.

Once again, grain prices appear to be doing the opposite of what you might expect. Rather than prices rising on news of slightly lower yields in the US, the Chicago price of corn has actually fallen this week and is back close to the very weak $130/t mark. This behaviour in markets appears irrational.

Europe

On the Euronext exchange (MATIF) in Paris, grain prices remained subdued, with the exception of oilseed rape, with prices boosted by a weaker than expected harvest in Europe and a lower estimate for the Canadian canola crop.

December 2016 delivered milling wheat has dropped €2/t since the start of the week to currently sit at €165/t, while December 2017 wheat fell below €176/t.

European maize (corn) prices were back slightly, with November 2016 maize down to €166/t, while November 2017 maize finished below €170/t.

Oilseed rape prices have risen almost €10/t in the last fortnight, with November 2016 rapeseed currently trading at €376/t, while November 2017 rapeseed finished at €357/t.

Chicago

In Chicago (CME), wheat prices continued to be weighed down by massive global stocks and strong export prospects in Russia and Canada. Corn prices have fallen back close to yearly lows of $130/t, despite the ProFarmer crop tour indicating lower than expected yields.

December 2016 wheat has dropped over $4/t since the start of the week to sit below $156/t (€138/t), while December 2017 wheat was back to $185/t (€164/t).

The market has continued to fall for corn this week, with December 2016 corn down close to $5/t since Monday to sit close to $130/t (€116/t), while December 2017 corn has fallen to $147/t (€130/t).