International grain markets continued slowly upwards last week, but went into reverse at the start of this week. This was mainly the result of a proposal to increase the quantity to be exported from Russia after February, plus an increase in the estimated Australian crop, and a significant sell-off by funds. Whether these factors have a short- or long-term impact on sentiment remains to be seen.

Australian crop increases

A significant bounce back in the Australian wheat crop has been anticipated all year due to the significant rainfall that put out the fires and replenished soil reserves. Crops there were further helped by rainfall during the critical flowering and grain fill stages in September and October.

Now the official government estimate for production has been increased from September’s 28.91mt forecast to 31.17mt. If this happens, the crop would be up near the record set in 2016/17 and more than double last year’s crop.

Russian quota

Last week, the Russian agricultural ministry proposed to increase its 15.0mt wheat export quota post-February to 17.50mt. If this gets the required government approval, it will increase supply on to global markets from what has been a big production season in that country.

Meanwhile, the AHDB reports that an estimated 22% of Russian winter crops are currently in ‘poor’ condition. This could signal problems for output in 2021, but recent rain may help alleviate some of the drought pressure.

Soya going off the boil

After months of intense purchasing, the recent AHDB report indicates that Chinese demand for soya beans may be starting to slow. And the recent price surge meant that crush margins are lower and exports from the US have also slowed. As a result, prices have eased back for the moment.

Native prices

The weakening in futures markets leaves buyers anticipating lower prices, but sellers remain unwilling to sell. However, market indications suggest that nearby physical prices remain broadly similar to last week, with a slight weakening in sentiment on new crop.

Nearby wheat remains in the €220/t-plus range, depending on contract, with a small carry indicated out to May where price is suggested at around €222/t. Barley prices for early in the new year remain in the €187 to €192/t bracket, again depending on the required collection date. Price for May remains at €195/t for the moment. November wheat is back slightly at €195/t, but barley for this position remains around €184/t.