Strong export demand for UK wheat and ongoing concerns for the US maize crop have driven wheat prices higher again this week.
The London feed wheat futures November 2011 contract closed at £174/t on Tuesday (30 August), up about £5/t on last week’s two-month high. Domestic markets followed gains in the US, where a crop survey suggested yields in the western Corn Belt would be insufficient to compensate for those in eastern areas. The survey pegged the US maize crop at 317m tonne, 11m tonne below the US Department of Agriculture estimate.
The International Grains Council also reduced its estimate for the 2011/12 global maize crop on the back of poorer US yield prospects, to 849m tonne, some 10m tonne less than last month. This outweighed a predicted 3m tonne increase in the world wheat crop, to 677m tonne, largely due to better than expected yields in Europe, Russia and China.
Adding to the bullish sentiment, traders here have reported renewed export activity after the summer lull and good buying interest for UK wheat to the near continent. Gleadell said that recent rain across France and Germany had resulted in more wheat being downgraded to feed quality, although the Ukraine and Russia had potential to produce more quality wheat this season.
But uncertainty over the exact size of crops that could be available from Black Sea regions, combined with ongoing worries about the fragile state of the economic recovery, have kept the finely balanced markets nervous.