Weather gives boost to world grain prices
Published 20/07/2010 | 05:00
Grain prices continued to strengthen on world markets over the past week, with a significant weather premium developing.
A lift in US grain prices resulted in a considerable inflow of money from speculative funds. Indications that hot weather across the US corn belt could continue until the end of the month resulted in a hike in US maize corn quotes.
The French MATIF milling wheat price has increased by more than €35/t in the past fortnight, driven by concerns over the Russian, Ukraine and EU harvest and following on from a recent writedown of 4m tonnes in the Canadian harvest.
On the home front, the winter barley harvest has been slow to date, with somewhere between 10pc and 15pc cut so far. Yields are moderate, ranging from 2.8t to 3.4t/ac. with the average closer to 3.1t/ac.
Reports from the trade suggest that some buyers have been attempting to pick off sellers with offers of €112-115/t (exclusive of VAT) at 20pc moisture. However, private deals are understood to have been done at up to €130/t for barley at 18-19pc moisture.
Commenting on the trade, IFA grain committee chairman Noel Delany said: "No farmer should deliver grain before receiving a commitment on price. This week has seen increased interest from buyers as old crop supplies have all but dried up, with deals being done from €125 to €130/t for barley at 18-19pc moisture."
The downgrading of supplies from the EU and Russia opens up export opportunities for US wheat for the 2010/11 campaign. Prices on the Chicago commodity markets continued to increase as speculative funds bought an estimated 20,000 wheat contracts, driving prices to six-month highs on Thursday before easing back slightly on Friday. Meanwhile, wheat futures for LIFFE feed wheat moved to 13-month highs.
US wheat prices have increased by 33pc in the past month. Analysts suggested that maintaining the current price momentum could be difficult given that stocks-to-use ratios will remain high in the five major exporting countries even after the current writedowns.