Wheat

Weather woes continue to hit US wheat farmers as the condition of crops in key growing states were downgraded once again in February due to ongoing drought conditions.

Just 12% of wheat crops in Kansas, the largest wheat-growing state in the US are now rated as good or excellent, compared to 43% a year ago. This continues to be an important factor which is helping to drive international wheat prices as of late.

Crops are due to break dormancy in the coming weeks and unless sufficient amounts of rain fall, yield reductions are likely.

However any potential beneficial impacts to wheat markets due to struggling US crops could be offset by European, Ukraine and Russian crops which have been described as good to excellent. Recent fears of frost damage to the black sea regions wheat crops have eased in recent weeks.

Maize

Argentinian drought continues to cause concern for the countries maize crops. The Buenos Aires Grain Exchange (BAGE) rated just 9% and 2% of early and late maize crops respectively as good or excellent. Yield reductions are likely to be incurred in the coming days unless rain arrives.

Reports from some farmers in the region suggest that corn ears are 70% smaller than normal. Rainfall amounts during this year’s growing season have only been a quarter of the yearly average which will have a yield impact.

Soya beans

Argentinian weather once again dominated market sentiment this week as soy meal and soya bean future prices reached their highest since the summer of 2016.

Due to continued drought conditions, Argentina yet again reduced its projected soya bean harvest to 44Mt from 47Mt the previous week.

This is the second consecutive weekly reduction of 3Mt of the Argentine soya bean harvest made by the BAGE.

This highlights the severity of the ongoing drought and its damaging effect on the crop. Some reports suggest that if BAGE forecasts are realised, this would mean this year’s harvest would be 13.5Mt lower than last year and 10Mt lower than the current USDA forecast (AHDB).

Elsewhere, favourable weather in Brazil has helped the soya bean harvest progress during the week. Harvested progress in the country is just 2% behind the five year average.

Europe

Closer to home, on the Euronext exchange (MATIF) in Paris, grain prices failed to follow the strong gains made in Chicago this week. While maize and wheat recorded marginal gains, oilseed futures fell which essentially erased the gains made last week.

Paris maize gained €0.75/t over the week to finish yesterday’s trade at €168.25/t.

Milling wheat for delivery in December recorded a similar gain of €0.75/t since last week to finish yesterday’s trade at €174/t.

Oilseed rape for delivery in November recorded a loss, with Paris prices down €4.25/t to €353.50/t.

Chicago

Across the water, the Chicago grain market (CME) maize prices rallied significantly to hit the magical $4/bushel (€157.5/t) mark. Wheat and soya bean markets also recorded steady gains which will help recover the significant losses incurred two weeks ago.

2018 futures now stand at $382.50/t and $203.19/t for November delivered soya beans and December delivered wheat respectively, up $4.04 and $9.55 on last week.

Maize futures rallied over week, with contracts for December delivery up $5.91 to $162.67/t.

Read more

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Grain markets: can the Beast from the East lift wheat futures?