Futures prices continued a downward slide over the past week. The trend was exacerbated on Tuesday, especially in the US, with reports of improving crop conditions in the southern plains and in the Midwest.

Kansas is the largest wheat-producing state in the US and 50% of its crop area was rated as good to excellent – an omen for output potential there. These ratings increased as a result of higher soil moisture availability following recent rains.

The USDA is to issue its prospective plantings report on Wednesday of this week, which gives an indication of spring planting intentions on farms.

Ahead of this, commentators had forecasted maize area at 93.2 million acres and soya beans at 90 million acres. If this happens, US maize area would be up 2.6% on 2020 and soybean acreage would be up 8.3%. These forecasts caused corn and bean markets to drop on Tuesday ahead of the grain stocks and prospective plantings reports.

Lower stocks

That’s the acreage forecast. On the supply side, things are more questionable. Observers indicate that big fund investments in markets have been in anticipation of a strong supply and demand report.

However, if it is more bearish than is anticipated, it could result in a sell-off and put downward pressure on maize markets. If this happens, it is likely that all grain markets could weaken as a consequence.

However, as stocks are an important element of this report, many industry predications still indicate that the US will have the lowest maize and wheat stock figures for years.

However, USDA numbers that carry the greatest weight and industry opinions really matter little in comparison.

Higher EU output

Higher output prospects are not confined to the US. The European Commission recently estimated wheat production at 127.7mt in the EU-27 for 2021/22. This estimate is almost 10mt higher than last year’s output and 4% above its five-year average.

This might indicate a degree of price pressure, but it is also important to note that stock levels are also likely to be considerably lower than in previous years. Stocks always have an impact on total market availability.

Native prices weaken

Following a few weeks of weakening futures sentiment, native prices eased back on all market positions this week.

Better new-crop prospects may be influencing both current demand and price anticipation and this could make physical sales difficult in the short term.

The weakening in the market is already being seen in lower Russian wheat prices.

Native wheat has eased back to around €245/t, with barley around €215/t. Imported maize is also back from €250 to €245/t. New-crop wheat is currently put around €202 to €203/t, with barley at €190/t.