Grain prices have risen sharply over the Christmas break, with drought in South America threatening maize and soya crops.
London wheat futures ended the week to Tuesday (3 January) up by more than £8/t, before easing slightly as Farmers Weekly went to press on Wednesday (4 January). "Ex-farm prices have reached up to £150/t, which has triggered a good volume of farmer selling, bringing more liquidity into the market," said Openfield grain trader Simon Ingle.
"The extended drought in South America is affecting their corn and soya crops, and because the market was oversold there has been a lot of short covering, which has driven prices up very quickly."
Some reports predicted a 20% drop in Argentina's corn production against the US Department of Agriculture's latest forecast of 29m tonnes, he said. And Brazil's output was expected to drop by 3m tonnes to 60m tonnes. "The corn balance sheet is very tight, and there's not a lot of room for those sort of losses. But who know what is going to happen now – it depends whether it starts raining tomorrow or doesn't rain for a month."
Paris oilseed rape futures ended the week to Tuesday up by €16/t (£13.30) to €449/t (£374/t), equivalent to about £358/t ex-farm.
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