Grain prices have strengthened over the past week as ongoing dry weather in several key production areas has pushed international markets higher.
Of particular concern is the impact of moisture stress on corn (maize) and soya bean crops across much of the US grain belt, where earlier this week the US Department of Agriculture downgraded its crop condition estimates for both crops.
Hot, dry weather has also hit yield prospects in Russia and Ukraine, despite some recent rains, and a number of analysts have cut production estimates for those regions.
Such reports sparked a rise in Chicago and European markets this week, with London feed wheat futures prices up about £4-5/t on the week. November 2012 contracts rose to £159/t on Tuesday (19 June) and were back closer to £157/t as Farmers Weekly went to press mid-week, with May 2013 at £164/t.
Those gains had filtered through to ex-farm prices, which were up by a similar amount to about £150/t for harvest, with a £1/t a month carry from there onwards, said Gleadell’s David Sheppard.
“We’re certainly not in the situation of a Russian export ban or anything like that, but we are still in a weather market that is being driven by speculation and crop reports. There’s a lot of froth that will take a bit of time to come out. We need to see some fundamentals to back up the speculative moves seen recently.”
Saxon Agriculture’s Mark Smith said the US maize crop was the biggest grain crop in the world and its condition would continue have a particularly important bearing on prices this season. There was some concern in the trade that forecast yields used by the USDA were overly optimistic, which had encouraged more speculative activity, he said.
“From a UK perspective, we’ve had more than enough rain recently and are seeing some good prices, which gives farmers an opportunity to lock into a profit,” he added.
Early indications from the French barley harvest, which had just got underway, suggested yields were above average, Mr Sheppard said. However, there is still a long way to go in the season and ongoing political and economic uncertainty across the eurozone could also have an impact on markets.
“Euronext prices were supported by firm prices in Chicago, while the optimism linked to the results of legislative elections in Greece was short-lived,” an Agritel report said. “The economic context remains fragile and Spain remains a major source of concern.”
Rapeseed prices have also been supported by the US soya bean market and a tight balance for oilseeds. Ex-farm prices were about £355-360/t at the time of writing.