Global grain futures markets went into downward tailspin over the past week on the back of USDA numbers that indicated higher production, especially from South America, and higher stocks. These are ultimately supply pressures, but now it seems that dryness concerns for the US wheat crops is, once again, reversing market sentiment.

But all futures prices are still well back on a week ago. MATIF December wheat closed on Tuesday night at €172.75, back from around €176/t. Chicago SRW wheat closed Tuesday at $4.786 per bushel, back from $5.04. But prices were rising again on Wednesday following US wheat dryness concerns.

Continuously increasing estimates for South American crops was the major downward pressure last week. This affected all markets, including oilseeds, and Brazil and Argentina were centre stage on the issue.

It is expected that US farmers will decrease corn area by around four million acres this spring in response to the relative prices for maize and soya beans. But the decision is based more on the move being the lesser of two evils rather than the greater of two benefits.

Physical prices show less volatility and native prices remain broadly similar. Spot wheat is put at €178 to €180/t, with barley at €163 to €165/t. Prices for May are now broadly similar.

November wheat is now closer to €170/t. And November barley is €160 to €161/t. November oilseed rape is back about €10/t to be around €390/t.