International grain markets continue to have a bearish tone, with prices back and possibly still falling, but there has been a slight recent upturn.

For wheat, this is hinged on the forecast of large new-crop supplies, even though there has been some lowering of expectation. While we in Ireland look at our crops and wonder what the year will bring for average yield levels, we must remember that harvest in the northern hemisphere will start later this month.

Perhaps the bigger fear on the wheat side is the lowering of predicted demand, as recently forecast by the International Grains Council (IGC).

This might seem at odds with thinking here, as demand for flour has got a lot of recent attention, but we are a small market, restrictions are beginning to lift and who knows but that the IGC forecast could be right, as people strive to return to a version of normality.

The bigger fear on the wheat side is the lowering of predicted demand, as recently forecast by the International Grains Council

Prices were supported in recent weeks from dry weather conditions across Europe and the Black Sea. This has now faded and it is thought that rain across southern Russia and Ukraine will continue to relieve the dryness pressure there and help output potential. It is also expected that conditions in France, Germany and the Baltics will help to alleviate recent dryness challenges.

That said, the IGC reduced its estimate of global wheat production for 2020/21 by 4.1mt last week. However, these estimates also showed an increase in global stock levels at the end of this period, due to its forecast of reduced global consumption in the wake of the ongoing coronavirus pandemic. While the fundamentals for maize are still bearish, with US price continuing to fall, the market is asking how much further futures maize prices can fall.

Chicago futures fell as low as $3.25/bushel (bu) and are currently floating around $3.33/bu for December contracts. US maize price has been largely falling since July 2019 following a period where they floated either side of $4.12/bu.

These estimates also showed an increase in global stock levels at the end of this period, due to its forecast of reduced global consumption in the wake of the ongoing coronavirus pandemic

The current price levels force an interesting question for US producers. With production costs estimated at between $3.70 and $4.20/bu, did producers opt to not plant inferior acres? Will they hold back on inputs?

Farmers there are considerably more market sensitive than EU farmers and this can already be seen in the destruction of stock that have no immediate market.

The reduction in the US internal feed market would be a further blow on top of the reduction in demand for maize for bioethanol production.

In Ireland, physical prices are broadly similar to last week, with spot wheat in the €200 to €204/t range and barley back at €170 to €172/t.

November wheat ranges from €190 to €194/t, depending on the day, but barley is more likely to be sub-€170/t.