Bullish outlook for world crops sees market lows

Grain markets continue to test new lows, with a bullish outlook for global crop production weighing on international and domestic prices.

Last week, the US Department of Agriculture raised its estimate of global maize ending stocks by 5.4m tonnes due to a combination of higher production and lower demand. It increased its wheat stocks estimate by 900,000t, to a three-year high of 189.5m tonnes, while also raising oilseed stocks by 3.6m tonnes due to a sharp rise in US soya bean production.

See also: US figures pressure grain and oilseed markets

Soon after the report, US, EU and UK futures markets dropped sharply, putting new crop wheat at £115-120/t ex-farm for harvest movement.

Milling wheat premiums remained at £25-30/t over feed, but oilseed rape values slumped to about £230/t ex-farm for harvest.

Although the European Commission forecast a 1.9% rise in EU wheat production from last year, to 139m tonnes (7% above the five-year average), rain had sparked concerns over crop quality, with some signs of sprouting in wheat, barley and oilseed rape.

“On top of the supply fundamentals, the gradual appreciation of the pound is adding further downward pressure in sterling terms,” said a report by HGCA. “Demand and trade should become weightier drivers once production levels are established post-harvest.”