The past week has largely seen a weakening in international new-crop grain futures prices on the back of improving prospects for the 2021 harvest, especially for wheat.
Maize continues to be the main driver, while wheat is more subdued. Chicago December maize futures increased in the early days of last week and then weakened, but Chicago wheat has been falling since 7 June.
MATIF December wheat is also lower, having closed last Friday at €211/t, down from €213.75 the previous week. The trend has continued into this week, where it closed on Tuesday at €206/t.
In recent weeks, maize markets were supported by dry conditions. Now a change in weather prospects is depressing prices.
Some of the more recent price rises hinged on market strengthening news from the World Agricultural Supply and Demand Estimates (WASDE) report in the US last week, but it offered little in the way of market support.
And that lack of support is now causing prices to weaken.
The report further decreased the output volumes for Brazilian maize to 98.5Mt and internal US demand was increased for bioethanol production.
But overall global maize production forecast was left unchanged, for now.
Global wheat production was increased by 5.5Mt, to give a forecasted record 794.4Mt. This was largely a consequence of increased crop size estimates in the EU, US, Russia, and Ukraine.
Recent internal estimates for Brazilian maize are lower than WASDE, but those numbers failed to strengthen the market because the trade believes the number will be even lower.
Meanwhile, Argentina’s Grains Exchange increased its 2020/21 maize production by 2.0Mt to 48.0Mt last week, while the WASDE has this number at 47.0Mt.
High demand for shipping has resulted in significant increases in freight costs for all goods.
Chartered costs have increased by 15% to 20%, while spot requirements are higher again.
This is partly because of high demand, but also because there are fewer vessels available due to the high costs of upgrading ships to meet new international transport requirements.
Nearby prices remain similar at €250/t for wheat and €240/t for barley. But traded volumes are very low.
New-crop prices are weaker this week at €215/t for wheat and €205 to €207/t for barley.