Weather and crop fears push grain prices higher
Supply worries and weather extremes continue to push up grain prices, with poor drilling progress for 2013 weighing heavily on the market and the US drought leading to the poorest ever crop ratings for November.
The London May 2013 feed wheat futures contract reached £224.50/t on Monday (26 November) while new crop for November 2013 closed at £191.50/t.
The EU 2012 maize crop is forecast by analyst Strategie Grains at 53.6m tonnes, compared with 63.4m tonnes in 2011/12. Maize imports have risen to their highest since 2007 in an effort to compensate for the drop in production and to meet greater demand as stock is housed earlier and maize replaces wheat for some uses.
US maize prices were up 3% on the week on strong export sales.
Soya bean prices also rose last week on South American weather concerns, while US wheat exports are picking up as EU and Black Sea sources are priced out of the market, said HGCA.
The UK and France have suffered the poorest harvest conditions and the biggest knock-on effect on drilling of the 2013 crop, said the EU’s Mars crop monitor report.
Ukraine, on the other hand, has generally had far better growing conditions than last year, said US analyst Martell Crop Projections. Southern Russia, however, is still suffering from drought, with just 11mm – or 32% – of normal rainfall in the past month.
Hard red winter wheat accounts for just over half of US wheat production and the crop has made its poorest start on record, said Martell, with 28% of the crop rated poor or very poor.
There are also concerns about the growing soil moisture deficits in corn growing areas. “The US Drought Monitor indicates a large area of the corn belt in extreme drought in Nebraska, Kansas, South Dakota and southwest Minnesota,” said a recent Martell report.
“Severe drought is present in northern Illinois, Missouri, Wisconsin and North Dakota. A very significant amount of corn is in jeopardy – 46-47% unless heavy winter-spring precipitation replenishes the subsoil.”