Grain price: Supply estimates remain down

Grain prices continued to drop back on Monday (July 16). This was also the case last week, when prices dropped slightly from the highs hit at the beginning of the month.

Harvest is well underway across Europe, the Baltic states and the US. Futures trading, tariff wars and reduced yields are all adding to the movement.

However, the focus moved back to the weather this week. Corn quality in the US is slipping, according to USDA (United States Department of Agriculture) crop reports.

75% of the corn crop is rated good to excellent, while 71% of soybeans rate good to excellent. Drought is also preventing crops from being sprayed in the US; many wheat crops are expected to go without a fungicide.

USDA world agricultural supply and demand estimates

According to World Agricultural Supply and Demand Estimates from the USDA, US wheat production is set to increase by 54 million bushels.

Rain made its way to the Baltic states in the past number of days and to parts of Europe; but the drought has done its damage in France and Germany, where yield will be down on last year.

The USDA report estimates that production will be down 4.4 million tonnes in the EU, while Australian wheat yields are expected to be down by two million tonnes. Russian wheat is estimated to decrease by 1.5 million tonnes and the Ukraine wheat crop is expected to be down by one million tonne.

Corn production in Russia and Canada is expected to be down, while EU production looks like increasing.

Barley production is estimated to be reduced in the EU, Russia and Australia; but is expected to increase in Canada.

LIFFE

LIFFE wheat (November) hit £171.90/t (€194.17/t) on July 6; but, a week later, this price was at £169.50/t (€191.46/t), having hit £167.55/t in the meantime. At close of business yesterday (July 16), this price stood at £169/t (€190.89/t).

MATIF

On July 5, MATIF wheat was at €189.75/t. However, on Wednesday of last week, MATIF wheat for December hit €181/t. By the weekend, MATIF had bounced back to €185.50/t and – as of yesterday evening – the MATIF sat at €186/t.

CBOT

Maize remains competitive in the US and wheat price may see an increase when corn consumption decreases.

Having recovered from its drop somewhat, CBOT September wheat stood at 515.25c/bu (€161.79/t) on July 6. However, Wednesday (July 11) saw the price drop to 471.75c/bu (€148.29/t). By Friday (July 13), CBOT wheat price for September had improved and hit 497c/bu (€156.14/t).