Markets reacted to mixed news over the week. In Europe, markets rallied in response to new estimates for this year’s EU grain harvest which forecasts a 6% drop in EU cereal and oilseeds production, due to extreme weather conditions. The total harvest is now expected to be in the region of 273.8 million tonnes (Mt).

Meanwhile, US markets continued on their downward trajectory as trade tensions between the US and China continue to escalate. Tariffs are expected to be imposed on Friday 6 July.

Wheat

The European Commission cut its forecast for 2018 EU soft wheat production to 137.6Mt. This represents a 2.6Mt reduction from its May estimates. EU soft wheat production is now estimated to be the smallest since 2013.

These reductions reflect the lower yield projections released in last week’s MARS report following adverse weather in a number of countries, the AHDB reports. Similarly, the forecast for barley output has been reduced from 2.6Mt to 58.4Mt.

Further afield, SovEcon revised its forecast for Russia's 2018 wheat crop downward by 0.6Mt to 72.5Mt due to cold and rainy weather in Siberia affecting spring wheat planting. This represents a 15% drop from 2017’s record 85Mt wheat harvest (USDA).

Oilseed

The 2018 EU rapeseed production forecast has been cut to 20.8Mt. The 0.8Mt cut by the European Commission contributes to the 1.2Mt reduction from the 2017 harvest.

The latest release from Statistics Canada states that the area planted in rapeseed reached 9.2m ha in 2018, a 0.6m ha increase from March estimates.

European stocks

European grain prices may receive more support if anticipated grain stock reductions are confirmed. The European Commission now expects soft wheat stocks to fall by 4.6Mt over the course of 2018/19, instead of by 2.0Mt. Barley stocks are forecast to decline by 1.5Mt when a 1.1Mt increase was expected in May, the AHDB reports.

On the Euronext exchange (MATIF) in Paris, maize, oilseed rape and wheat futures recorded strong gains over the past week.

Paris maize for delivery in November gained €3/t over the week to finish yesterday’s trade at €170.75/t.

Oilseed rape for delivery in November recorded a gain of €9.25/t to €365.5/t.

Wheat for delivery in December also recorded a gain of €6.75/t over the week to finish yesterday’s trade at € 184.75/t.

Looking across the water to the Chicago grain market (CME), maize, wheat and soya beans markets recorded losses over the week.

2018 December futures now stand at $142.1/t and $186.6/t for maize and wheat, respectively, down $3.86 and $0.73.

Soya bean futures for November delivery also recorded a loss of $8.97 to $315.7/t.

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