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Sunday 11 December 2016

Weather gives boost to world grain prices

Declan O'Brien

Published 20/07/2010 | 05:00

Grain prices continued to strengthen on world markets over the past week, with a significant weather premium developing.

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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.

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MATIF November wheat futures rose €7.75/t on the back of the revised production estimates from Strategie Grains this week. On the feed wheat front, new-crop November 2010 LIFFE wheat gained £9.15 over the day to close at £129.75 on Friday.

Total EU grain production for the 2010 harvest is expected to fall by 12m tonnes on last season's harvest of 293m tonnes. Strategie Grains, in their latest forecasts, have revised their soft wheat production estimates down by a further 3.6m tonnes to 129.5m tonnes since June due to extreme weather conditions in the key producing areas such as France, Germany, Britain, Belgium and Poland.

The biggest decline is expected in French wheat production, which is forecast to fall by 2.7m tonnes. It is estimated that more than half the French barley crop has been harvested to date and yield indications so far would point to a potential barley harvest of 35m tonnes.

The Ukraine's agricultural ministry has forecast a drop of 6m tonnes in grain production to 42m tonnes, with a projected export potential of 20-21m tonnes for the 2010/11 marketing year. Continuous rain over recent weeks has severely impacted on crop yields and quality. Meanwhile, grain stocks in the Ukraine in the beginning of July were estimated at 4.9m tonnes, down 2.4m tonnes on the previous season.

Russia is experiencing one of its worst droughts in more than 100 years. Official forecasts put this season's harvest at 85m tonnes. However, Russian agricultural analysts SovEcon are predicting a harvest of 75m tonnes. Russia has an estimated grain carryover from last year of 24m tonnes.

Irish Independent



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