Wheat

Last week, global wheat markets closed reasonably higher than of late in reaction to ongoing weather issues in key areas production.

The ongoing dry period in the US has expanded drought conditions in the top four winter wheat-producing states. Kansas (which contains 24% of the 2018 US winter wheat area), Texas (15%), Oklahoma (13%) and Colorado (7%) mainly grow hard red winter (HRW wheat) and are continuing to suffer from drought.

For this time of year, the area effected by drought in these four states is the highest since 2013. As the US winter wheat area was estimated as the smallest since 1909, any loss of winter wheat crops may have a significant effect on the output of the 2018 US wheat harvest.

There is still time for rainfall to replenish soil moisture levels before the crops emerge from winter dormancy. However, if the dry conditions persist into spring, it could negatively affect yield potential.

Elsewhere, recent snowfall and warmer temperatures in the Black Sea area, chiefly Russia and Ukraine, have helped to alleviate concerns over the vulnerability of their advanced wheat crop. As a result, the region may be back on track for a bumper crop.

In Buenos Aires, the local USDA office has estimated Argentine 2017/18 wheat production to increase to 18Mt, 0.5Mt higher than the USDA’s official estimate. Due to this larger output, total wheat exports for 2017/18 have also increased to 12Mt, 0.1Mt higher than the USDA’s estimate.

Oilseeds

There were mixed price movements in the oilseed markets last week. European rapeseed prices declined due to a strong euro. A reduction in demand and poor crush margins are contributing to high EU rapeseed stock levels which is exerting downward price pressure on rapeseed.

Soya beans

Soya bean markets continue to rally reacting to weather uncertainty in South America and short-term logistical problems. Weather forecasts from Argentina indicate that the heat and dryness will extended into mid-February, which may help to sustain this trend. In addition to this, heavy rain in important production areas of Brazil has slowed harvest.

Maize

Maize prices are being pulled slightly higher by continued weather uncertainty in Argentina and South Africa, and the spill over support being created by recent strengths in wheat and soya beans. The weakened dollar is contributing to increased exports from the US.

Europe

On the Euronext exchange (MATIF) in Paris, grain and oilseed prices were all up over the last week.

Milling wheat for delivery in December recorded a €11.95/t increase since last week to finish yesterday’s trade at €170.75/t.

Similarly, November 2017 corn (maize) prices have increased €6.25/t in the last week to finish at €165.25/t by the close of business on Monday. Oilseed prices have also increased slightly. Rapeseed prices from Paris are up €2/t since last week to €350/t.

Chicago

Looking across the water to the Chicago grain market (CME), wheat and soya bean markets continue to rally with prices making steady gains in the past number of weeks.

2018 December futures now stand at $154.1/t (€124.1/t) and $187.39/t (€150.91/t) for maize and soya beans, respectively. Maize futures have also increased slightly with prices up $2.53/t to $154.1.

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