International futures markets for gains softened somewhat over the past week, especially on the new-crop side.
This was largely as a result of a significant sell-off by investment funds who opted to take profits in the absence of any major news to support further price rises for the time being.
With spring beginning across much of the winter cropping area of the world, most crop condition reports are better than had been suggested, awakening the realisation that this could once again be a high-output global harvest, especially on the wheat side.
MATIF December wheat prices are back about €4.50/t on recent highs, Chicago December wheat futures are back $10/t over the same period.
In general, nearby maize in Chicago has been flat but new-crop weakened somewhat in recent days. But these prices are still at around $185/t compared with $145/t prior to last year’s harvest. These prices push US producers well up into the profit zone and this will encourage previously idle acres back into maize or soya beans this year, weather permitting.
Still a focus on maize
Traders continue to watch everything that happens in maize closely. The AHDB reports that recent US export sales to China have been substantial.
Indeed, it calculates the sum of all such exports to be around 23.2mt so far in this marketing year and suggests that the USDA estimate for this trade of 24mt is likely to need adjusting upwards if this activity continues.
Looking at Brazil, the AHDB report indicates its safrinha maize planting campaign will have about 25% of this crop sown later than its ideal planting window.
This could affect production there, leaving a tighter global supply and demand outlook for maize.
This may offer incentive for further maize price increases, with a possible benefit for feed wheat and barley prices.
Wheat prices have looked slightly more pressured in recent weeks as last year’s production estimates look higher and prospects look better for the year ahead.
Black Sea exporters again look to higher production estimates plus the chance that high Russian production will drive down prices to secure exports, regardless of the tax level.
This is acting to weaken overall sentiment on wheat, which has appeared bullish for some time.
It is likely that a new weather concern will be needed to add confidence to already high prices.
But there is also a concern that demand for wheat is slowing, which could be a reaction to price.
Nearby positions remain strong with wheat remaining around €250/t and above, and barley in the €215 to €220/t bracket. November positions are weaker though with wheat back around €202 to €204/t and barley at €190 to €192/t.