Futures rebound on back of USDA reports
Futures prices for wheat rebounded strongly on Friday after a major sell-off of agricultural commodities earlier in the week.
Both the fall and subsequent recovery were linked to United States Department of Agriculture (USDA) reports on the world maize crop.
The first report predicted higher maize, wheat and soyabean stocks. The higher maize forecast, up 8m tonnes, caused a fall in futures prices and triggered a sell-off by speculative funds that accentuated the price drop even further. In all, US maize prices fell by over 10pc in the week.
As a result, Irish dried wheat prices fell as low as €185-187/t, with barley €7-10/t less. Buyers stood back from the market anticipating further price falls, while sellers were reluctant to sell.
However, markets staged a recovery towards the middle of the week, with wheat trading on Wednesday at €190-193/t, while imported stocks moved to €195-197/t. Native barley traded €7-10/t under wheat.
The second USDA report, issued on Friday, showed that the US maize crop yields are expected to be 13m tonnes lower than expected in September and 12m tonne lower than the 2009 harvest.
It is now believed that 2010/2011 US maize stocks will fall to their lowest level since 1995/1996.
The combined effect of lower production and increased demand will see closing world stocks fall by 16m tonnes for the coming season, which spurred the markets into action.