Another week of upward movement in international futures markets, but this time it is maize that is the driver.

While all estimates continue to indicate surplus global maize production, there is growing concern about the impact of recent storms and crop condition on US.

Maize is the driver now

While there is no solid indication yet that US output will be heavily impacted by the storms, there is a level of concern in the market.

This has driven CBOT December maize futures up by $4.72/t since the start of August and taken it off the floor. Specifically, CBOT December corn has lifted from £3.20/bushel to $3.54/bu since 12 August.

Last week’s AHDB report suggests that supply may still win out and weaken maize price sentiment once again. However, the story is not clear-cut. Recent scouting visits to crops in six Midwest states suggest yield levels above the five-year average. However, this tour estimated national yields to be lower than the most recent USDA yield forecasts – hence uncertainty. The USDA crop condition scores were lowered this week also, partly due to recent storms plus the impact of dryness in some areas.

Closer to home, the EU’s crop monitoring service (MARS) lowered its overall yield forecasts for maize from 8.2t/ha in July to 8.0t/ha. This is mainly a consequence of the hot, dry weather over the past month in countries such as France and Germany, plus parts of Poland, Romania, and Bulgaria. The EU’s body representing grain trade, Coceral, lowered its EU-27 maize forecast to 64.4mt, 0.2mt lower than last year’s crop.

Wheat up also

The increase in maize prices has helped to pull up wheat and other feed prices. CBOT December wheat increased from under $5/bu on 12 August to over $5.40/bu this week. MATIF December wheat closed last week at €183.75/t, up from €178.25 two weeks earlier, and on Tuesday it closed at €184.25/t.

While recently stated wheat production issues remain as indicated, attention is now focusing on production in the southern hemisphere. While countries such as Australia are still likely to see a huge production increase, there are concerns about the impact of frosts on Argentinian production, on top of the already challenging start due to dry soils.

Native prices

The overall change in market sentiment is giving a firmer tone to physical markets this week. Nearby wheat is in the €193 to €195/t bracket, with barley closer to €172/t. November prices are slightly stronger, at €195 to €196/t for wheat and closer to €173/t for barley.