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European wheat future prices continue to rally over the week due to continued concern for global grain supply in 2018/19, with both the International Grains Council (IGC) and UN’s FAO sharply reducing their forecasts.
The IGC has cuts its forecast of total grain output by 12Mt to 2,077Mt while the FAO cut its projection by 24Mt to 2,075Mt due to adverse weather in the EU and Russia.
Ongoing escalations of US/China trade tensions may yet prove to be beneficial for grain prices or could put further pressure on markets depending on ongoing developments about crop conditions.
Wheat
Romania: UkrAgroConsult has cut its estimate for Romanian wheat yield in the 2018/19 season. The 2018 yield is expected to be 10% below last year’s record due to unstable weather conditions continuing to reduce yield potential of their winter crops in Romania.
Britain: The British wheat area in 2018 is 2% smaller than that for 2017, according to AHDB’s Planting and Variety Survey. With the 2017/18 UK wheat end-season stocks estimated to be the lowest since 2013/14, a lower area means yields need to be above the five-year average for domestic wheat supply to increase in 2018/19, the AHDB reports.
Germany: The German government reports a 6% fall in the winter wheat area from 2017. German grain production in 2018 has been forecast at 41.0Mt, 9% smaller than 2017 and the smallest harvest since 2007.
Soya beans
Tariffs worth $34bn were implemented by the US last Friday (6 July), with the Chinese retaliation including a 25% levy on US soya bean imports, the AHDB reports. Future markets rose sharply on Friday as a result.
Elsewhere, the latest AMIS market monitor crop outlook has highlighted favourable conditions for soya bean production in the US, Canada, China and India.
Oilseed
The prolonged hot and dry weather across Europe has led to a reduction in its rapeseed production estimate to 20.6Mt in 2018, a 5% decline from month earlier levels, Oil World and Strategies Grains report. In Germany, the EU's second largest rapeseed producer revised down its winter rapeseed production estimate by 0.5Mt year-on-year to 3.7Mt in 2018.
Statistics Canada released last week that the area of rapeseed in Canada is estimated to be down 1% year on year to 9.2Mha, the AHDB reports.
On the Euronext exchange (MATIF) in Paris, grain futures were up while oilseeds were back slightly on this time last week.
Milling wheat for delivery in December recorded a €0.75/t increase since last week to finish yesterday’s trade at €185.50/t.
Similarly, November 2017 maize prices have increased €2.25/t over the previous week to finish at €173/t by the close of business on Monday.
Oilseed rape prices were back slightly on last week. Rapeseed prices from Paris were back €2.50/t since last week to €363/t.
Looking across the water to the Chicago grain market (CME), wheat, maize and soya bean markets made steady gains over the past week, making up for the losses suffered last week.
2018 December futures now stand at $143.1/t for maize and $323.1/t for November-delivered soya beans up $0.87/t and $7.42/t, respectively.
Wheat futures have also increased with prices for the December-delivered crop up $1.25/t to $187.9.
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