The weather market continues, but wheat prices remain under pressure, having fallen in the past week. A recent USDA report increased end-of-season global wheat stocks for both last harvest and the coming harvest. Not surprisingly, this has pressured futures markets on both sides of the Atlantic.

The report recognises that there will be less wheat in the EU and the Ukraine, but production estimates in Russia have been increased following the rain last May. The AHDB reports that SovEcon increased its Russian wheat production estimate by 1.5mt to 82.7mt.

Perhaps the only potentially good news for markets is the concern over dryness in Argentina, which may limit the predicted record wheat area there.

But whatever that may do will still be relatively limited when placed alongside the predicted 76% year-on-year increase forecast for Australian production.

Australian production

The Australian government recently predicted that its wheat production will hit an eight-year high this season, as farmers there expand their areas after good rains which followed several years of drought.

Yield levels there are also likely to benefit from the additional soil moisture. Australian barley production is also expected to be up 17% from 2019/20 against a backdrop of export issues to China.

These factors combined pushed both Chicago and Paris wheat futures to their lowest level for some time last week. They picked up a bit over the weekend, but have fallen even further this week. Maize price followed a similar path and this has also seen slight additional falls this week.

Overall barley production from the region was increased by 1.0mt

Closer to home, Stratégie Grains reduced its EU27 + UK wheat crop estimate by 2.0mt, indicating that recent rains came too late to benefit crops in many areas. Its forecast of 130.9mt puts the EU wheat harvest 11% smaller than last year.

Overall barley production from the region was increased by 1.0mt, to make it bigger than last year’s production by the same amount.

The EU’s Crop Monitoring (MARS) service has further downgraded its forecasts for yields of winter cereals and rapeseed by around 2% from its May report.

This report also reduced predictions for UK yields, which could help ease export pressure ahead of the next Brexit deadline.

Native prices

Native physical prices remain broadly similar to recent weeks due to the lack of significant demand. Nearby wheat remains in the €200 to €202/t range, with barley still either side of €170/t.

New-crop wheat remains around €190 to €191/t, with barley at €170/t. The gap between barley and wheat is lessening as we move closer to harvest.