International grain prices had another challenging week following a few days of relative optimism. As I hinted last week, more countries are upping 2016 production estimates, leaving prices under continuous pressure. Two weeks ago, wheat output was increased for the US and Russia. Last week, an EU projection increased EU-28 wheat production by 1.9Mt, to 146.7Mt, due to higher estimates from Germany, Romania and Spain.

Markets are now focusing more and more on new crop and the intervening weather. Up to now, this has been primarily a good news story for production. The freeing up of wheat exports from Argentina seems likely to drive planting, production and exports from there.

However, there is somewhat more optimism in physical markets due to the price difference between wheat and maize, which favours demand for wheat. If maize price sentiment is helped by factors other than soya, this may pull up wheat prices also.

Native prices are slightly firmer, as buyers move to lock in some future needs in the face of a very uncertain soya complex. Spot wheat is now on the stronger side of €160 to €162/t, with barley €10/t lower. November wheat is in the €165 to €168/t range, with barley again €10/t lower. This week, Glanbia offered €130 and €120/t for harvest for green wheat and barley respectively, having offered €162 and €152/t for November earlier in the week.