International grain futures markets slipped back at the end of last week following news of significant rain in Argentina and significant fund selling.

The decline hit both nearby and new-crop positions, but markets appear to be recovering again this week.

As well as weather and funds cashing in on profits, there are other concerns emerging.

These include the attitude of the new US administration to its arrangements with China; fears that there may be a resurgence of swine fever in China which would impact demand; COVID continues to cast a dark shadow on markets; and there are fears that overall consumption could be declining in response to the higher prices.

While rain in parts of South America has helped crop prospects, it has come too late for many crops. But it may be of considerable benefit to Brazil’s Safrinha maize crop, which is being planted now.

Elsewhere, a recent AHDB report suggests that heavy snowfall in Russia is expected to boost soil moisture conditions. This has led to increased forecasts for its 2021 wheat crop.

Safrinha maize

As we watched global grain prices fluctuate and generally rise over recent months, the one remaining rabbit in the hat is Brazil’s Safrinha maize. The vast majority of the world’s other grain harvests have now been gathered.

This is part of a double cropping system and it is sown in the first three months of the year following soya beans. But soya bean planting was delayed by dryness and now harvest is late, which will delay planting and possibly impact yield.

Brazil is expected to produce 102.3mt of maize for this marketing year and the Safrinha crop is estimated to account for 76.58mt of this total.

So, the performance of this crop is crucial to the future direction of global grain markets – poor performance would add to bullish sentiment, while a big crop would act to calm markets. The Safrinha crop is vital to the amount of maize Brazil will have to export.

Native prices

The drop in futures prices last week brought a weaker tone to the market here, which has once again widened the gap between the price expectations of sellers and buyers.

While nearby prices might be regarded as similar to last week following this week’s recovery – wheat around €240/t and barley €210/t – the various uncertainties mentioned earlier are impacting on new-crop sentiment.

As a result, November wheat will has come below the €200/t mark, with €195 to €198/t now more likely. Expectations for November barley remain in the €185 to €190/t bracket.