Markets continue to be on edge and are bouncing on every piece of weather news.

They have become increasingly nervous following last week’s area and stocks report from the United States Department of Agriculture (USDA).

The US maize area has been watched for months and the almost 1.6m acre increase in the report was lower than had been expected by market analysts.

It was expected that an area estimate lower than what the market estimated would result in further price increases and that happened last week.

The report also indicated slightly tighter stocks, which added further to the price response last week.

Wheat markets strengthened slightly on the back of maize, but less so.

Weather is now critical

All of this means that weather is again centre stage for market sentiment. It is a major driver of crop output expectations.

At the moment, North America is having a major influence on market sentiment, especially for maize and quality spring wheat.

Last week, the 14-day outlook was for warm and dry conditions to continue from the Midwest up into Canada. Then the forecast changed to milder and wetter weather.

This has since pressured maize prices, but spring wheat is prices are holding.

Less maize in Brazil

Recent estimates from the Brazilian safrinha maize harvest vary in terms of volume. However, they all indicate production levels to be down considerably on the last US estimate.

With the next USDA world agricultural supply and demand estimates (WASDE) out early next week, a lower production figure for Brazil would further decrease maize supply.

However, the market is now asking if lower Brazilian output will be more than offset by higher US yields.

Some believe that lower Brazilian production has already been factored into the market and so news of higher US production may have the greater impact on sentiment over the coming weeks.

Native production

Physical prices remain broadly similar to recent weeks, except for barley, where harvest pressure and new-crop supply are beginning to impact.

Nearby wheat remains in the €250/t bracket, but barley has eased back to around €230/t.

November prices remain around €210 to €215/t for wheat, with barley around €205 to €210/t, depending on the day.

These prices are well below imported maize, but imported wheat and barley are now the main price makers as they take back demand from maize.