Grain price update: Drought in eastern Europe; harvest kicks off in US

Futures grain prices remain within a relatively steady range. On Wednesday, they had climbed the scale to last week’s levels. Meanwhile, planting is almost complete in Europe, while harvesting is getting underway in the US and Ukraine.

There is a lot of talk about drought in eastern Europe. However, the effects of this will not be known until later in the season; carry-over stocks may also take the impact of this drought out of the equation.

Spring planting same as 2017 in Ukraine

Spring sowing is almost complete in Ukraine – the world’s third largest exporter of grain – and is expected to finish at 7.3 million hectares; if this is the case, it will match last year’s figure.

The majority of this cropping area is sown to maize (4.5 million hectares), while 1.5 million hectares of spring barley have been planted.

The total area sown – to both spring and winter grain crops – in Ukraine is expected to be up on 14 million hectares; the country harvested 61.3 million tonnes of grain in 2017.

Winter barley harvest has begun almost three weeks earlier than usual in Ukraine. The first yields are reported to be down. However, it is too early to get a representative figure of the crop’s yield.

Russia’s exports unlikely to change

According to USDA (United States Department of Agriculture) reports, Russian grain production is expected to decrease due to cropping changes and weather effects on crop yield.

However, the countries exports are unlikely to change for many reasons; one being the availability of carry-in stocks.

US Harvest off to a slow start

In the US, the soft red wheat harvest is delayed due to poor weather in the south of the country. The hard red wheat harvest is also slow in Texas and Oklahoma and yields are ranging from 0.74t/ha to 3.4t/ha.

Futures

LIFFE wheat prices remain somewhat steady and at close of business last night (June 7) the November price stood at £161.20/t (€183.40/t); up from £160.85/t (€183.09/t) on Wednesday (June 6) and £159.30/t (€181.33/t) on Tuesday (June 5).

This was a significant increase from Monday (June 4), when it stood at £156.50/t (€178.64/t).

The MATIF wheat price for December 2018 was locked in at €185.75/t by close of play on Tuesday (June 5) and moved up to €186.50/t on Wednesday (June 6). This price was back to €186/t yesterday (June 7).

Chicago Board of Trade (CBOT) prices for soft wheat (July 2018) were down on last week and finished at $187.39/t (€159.28/t) on Tuesday (June 5). This price increased slightly by close of play on Wednesday (June 6); it stood at $191.07/t (€161.53/t).

The CBOT price peaked at $193.27/t (€163.84/t) on Thursday (June 7).