Futures grain prices continued to strengthen last week but they have since weakened considerably, largely as a result of the recent USDA report which suggested increased output for the US maize crop. Currency was also a factor. To some degree this correction was inevitable but it is still uncertain where price levels will settle.

Reduced European wheat production estimates reinforce the impact of the drought here. One estimate put 2018 EU wheat production at 127.7Mt – back from 141.8Mt in 2017. The current AHDB report suggests that this is being exaggerated by decreased maize production in France and decreased grain production in Germany.

The Russian harvest was again reduced and it is expected that wheat exports from Ukraine will be capped at 16Mt -- back 1Mt on last year.

Physical prices are much less responsive to market reports than futures markets. This is partly due to lack of market activity but local merchants are still very active in trying to source grain off farm. This had resulted in dry price offers of between €225 and €230/t in recent weeks, with €200/t mentioned for green grain. This sentiment weakened slightly this week but the hunger to secure supply is still there.

UK delivered prices were largely unchanged last week but oilseed rape delivered Erith was up £8/t to £345/t. Ex-farm wheat was up £6.10/t to £180.5/t while barley was up £11.10/t, to £168.3/t.