Grain prices came under pressure once again in the past week, mainly following revised figures for Russian output. This followed an increase in the official estimated area of wheat which saw Russia’s total wheat area raised to 29.4m ha. This is reported to be the highest area planted to wheat since the 1970s.

The area increase led the Russian Institute for Agricultural Market Studies (IKAR) to revise its production estimate back up to 78mt. This is only up 1.5mt on its previous estimate but the increase in the supply estimate led to a reversal in price sentiment. The production estimate increase was reinforced by higher than expected wheat yields in some regions.

MARS Report

While many European farmers have seen crops suffer from weather effects, last week’s EU crop monitoring (MARS) report suggested a mainly positive outlook for spring crops following substantial rainfall.

Its assessment of winter crops is more mixed. The report indicates cause for concern in winter crops in much of central Europe, southwestern Finland, and southern Russia.

While the favourable weather may have improved yield prospects in some regions, the MARS report revised its wheat output forecast downwards by a further 1.1% for EU-27 soft wheat. This is now down 3.9% on the five-year average.

The MARS report indicates that hot and dry conditions in southern and southwestern Russia did limit water availability at times

This decrease was mainly a result of lower wheat yield forecasts for Romania, Bulgaria and Hungry. These reductions outweighed the very modest output improvements indicated for many other countries.

The MARS report indicates that hot and dry conditions in southern and southwestern Russia did limit water availability at times and this is likely to negatively impact on both winter and spring wheat yields. So, weather in Russia will be key to the performance of its spring cropping areas.

Ukraine is another important player and the last AHDB report indicated that yields have been lower than anticipated, with over half the total crops harvested. If this trend continues, wheat production could be back at 24.3mt, down 4.2mt on last season.

Native prices

Yet again there is no major change in physical prices in our market. Old crop markets are now basically finished, certainly for barley, and we will have a level of carry-over of old crop into the new season.

Spot wheat prices remain around the €200/t mark, with new-crop barley around €170/t. November wheat feels slightly weaker at around €190/t, but barley is somewhat stronger at around €172/t.

At the moment maize ex-port is back up to €190/t, but this is likely to weaken again by €5-€10/t.