Revised US grain report pushes prices higher

It has been a wild morning on grain markets, with a US Department of Agriculture (USDA) report issued last night cutting expectations for corn and wheat crops and sending futures prices way up.

London’s November 2021 feed wheat futures contract stood at £198.70/t at lunchtime on Friday (13 August).

This was close to £12/t up on a week earlier and £4/t up on the previous day’s close, which was itself a closing high for the contract.

Spot prices gathered by Farmers Weekly averaged £183/t, a rise of £7/t compared with Wednesday’s values and a full £14/t higher than two weeks earlier.

Feed barley has gained about £10/t in the past two weeks, averaging £156.60/t ex-farm for August on 13 August.  

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Prices had already been on a rising trend for a month, as weather worries cut harvest forecasts and fuelled doubts over quality.

Saxon Agriculture trading director Mark Smith commented that the USDA report was uncharacteristically bullish, also that it looked like a tough season ahead for milling wheat importing nations.

Key points from the USDA report:

  • 2021 US maize crop forecast at 375m, a 10m-tonne cut compared with last month’s estimate and very close to last year’s 376m tonnes
  • 2021 US wheat crop forecast cut slightly to 46.2m tonnes (49.7m tonnes in 2020)
  • 2021 global wheat production forecast at 777m tonnes, a drop of 14m tonnes on last month’s estimate, and end-of-season stock estimate cut by 20m tonnes to 279m tonnes
  • 2021 global all-cereal production estimated at 2,769m tonnes, down by 26m tonnes on the month, with a 17m tonnes cut to end-of-season stocks at 760m tonnes
  • 2021 Russian wheat crop forecast at 72.5m, a cut of 12.5m tonnes since its last estimate and compared with a 2020 crop of 85.4m tonnes
  • 2021 Ukrainian wheat crop forecast at a record 33m, compared with a 30m-tonne forecast last month and a 25.4m-tonne crop in 2020
  • 2021 Canadian wheat crop forecast at 24m tonnes, a cut of 6.5m tonnes compared with last month’s estimate and well down on last year’s 35m-tonne crop

The Brazilian state grain agency Conab also cut its forecast for the country’s 2020-21 maize crop to 86.7m tonnes compared with 93.4m tonnes in its previous forecast and well down on last year’s 102m-tonne crop.