Global grain futures markets carried a slightly positive tone over the past week, but it would be wrong to say that the sentiment has switched to positivity.

The wheat market is once again influenced by new-crop concerns, mainly around dryness in many parts of the world, but the real impact of this will remain uncertain until harvest is well under way across the northern hemisphere.

Perhaps the single main influence in this regard was the release of European production estimates from the EU’s MARS facility.

The most recent report highlighted the apparent impact of the very wet winter across much of the territory, which was followed by a lack of rain and dryness in spring which has affected developing crops.

The MARS report stated that rainfall levels were in deficit across western Europe from 1 April to 15 May and this led the commission to reduce its yield forecast for soft wheat production in 2020 by 2.6% relative to its April report.

Another key area worth noting is Russia, which has become one of the biggest exporters of wheat

While the longer-term view remains bearish, the uncertainty caused by dry conditions in the Black Sea region could flip this sentiment.

Another key area worth noting is Russia, which has become one of the biggest exporters of wheat.

One of the major wheat-growing regions in the southwest has had significant dryness through much of the spring and this has led a number of official Russian agencies to reduce their estimates for grain production for this harvest.

The Russian Agriculture Ministry recently reduced its total grain production forecast by 5.3mt to leave it 1.2mt below last season’s output of 120mt.

One other external factor worth mentioning is the delay in spring wheat planting in the northern states of the US due to cold weather.

Maize will be big

The situation with maize continues to be pessimistic, with big crops still reported as likely globally. This has led to a fundamental lack of support for this crop.

While planning was delayed in parts of the US, the world’s biggest single maize producer, the USDA recently confirmed that planting has progressed well in positive conditions. And the rainfall that delayed planting is seen as adding to the soil water reserve to produce big crops.

The second big factor on maize sentiment is the reduced demand, especially for ethanol production, due to the general economic downturn caused by the COVID pandemic.

Local market

Native grain prices are broadly similar to last week. Nearby wheat remains around €200 to €204/t, with barley around €170/t. New-crop wheat remains in the €190 to €192/t range, with barley close to €170/t.