Grain Market Daily

James Webster

 

James Webster, Senior Analyst, AHDB Market Intelligence
James.Webster@ahdb.org.uk, 02476 478844

 

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Could new crop prices lift?

The value of the Nov-19 feed wheat futures contract has been dropping off for some time now. Last Friday new crop wheat prices fell to £143.75/t, the lowest point for the contract since February 2018. The contract recovered slightly at the beginning of this week, gaining on lacking maize progress, short covering and a drop in the value of Sterling.

Nov -19 Prices

Despite the recovery earlier this week, the new crop contract is still at its lowest point since May last year. But why and is there any scope for a lift in prices?

North America

Starting in the US, while wet weather has hampered maize planting progress – winter wheat is off to a flyer. Monday’s USDA crop progress report the proportion of winter wheat rated “good” or “excellent” is at its highest level since 2010. Moreover, the Wheat Quality Council Kansas wheat tour also highlights a positive outlook for US crops with production in the state estimated to be up 26 percent on last year.

It’s not all positive for US wheat however, and the spread between Chicago and Kansas winter wheat futures and Minneapolis spring wheat futures, suggest the spring crop could be an area for support. Spring wheat plantings in the US are currently 27 percentage points behind the 2014-2018 average, at 22 percent complete. That said, the high plains are forecast to be drier and warmer than normal over the coming week which will aid progress.

KC Spread

Europe

In Europe, wheat crops continue to look largely favourable, although dryness remains something to watch. Surface and subsurface soil moistures are below normal in many parts of Western and Eastern Europe.  Further dryness is forecast in Western Europe over the coming fortnight and this will be something to keep an eye on.

French agency FranceAgrimer currently estimate that 79 percent of soft wheat crops are rated “good” or “excellent”, just 2 percentage points above the same stage last year.

Black Sea

We highlighted earlier in the week that the Ukrainian wheat crop is forecast to be bumper. While the crop is forecast to be large, there are some moisture challenges for the southern production area. Rainfall in Ukraine is set to be normal in the coming fortnight, suggesting conditions are unlikely to deteriorate.

Finally, for Russia, while the winter wheat crop continues to look “ok”, the spring crop which is currently being planted may have one or two question marks placed over it. The key spring wheat regions in Volga and the Urals are very dry, and look set to continue being dry.

Russia

So while winter wheat conditions are likely priced in and markets are supressed, the spring wheat crop condition should be watched closely and could lend some support.

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