Grain price: Tariffs taking away from early-June price increase
Grain price is recovering from a significant drop over the past week. Having climbed and hovered since the beginning of June, prices took a steady drop since June 12.
However, numbers began to increase slightly from Wednesday (June 20). The reasons for the drop are numerous.
The increase (25%) in tariffs by China, that will hit US soybeans, is holding up stocks of maize and soybean and putting uncertainty into the market – one of the reasons for the drop in price.
However, world stocks are still estimated to be down; farmers should not be disheartened just yet, as prices began to climb again towards mid-week.
World stocks expected to be down
World stocks are expected to be reduced this season, with dry weather in Russia and Ukraine expected to bring yields down in these big exporting countries.
Initial fears of a poor harvest in the US are decreasing. Wheat crops being harvested at present are yielding more than first expected, while drought in some areas did not seriously affect crop establishment.
In other news, Japan has temporarily suspended the importation of wheat from Canada. Genetically modified wheat was reported to be present in Alberta by the Canadian Food Inspection Agency.
Approximately 1.5 million tonnes of Canadian wheat are imported to Japan each year. Reports from Canada suggest that the incident is isolated and that the genetically modified wheat did not enter the food chain.
The EU began to implement a 25% tariff on US maize imports as of yesterday (June 22). From 2012 to 2017, US maize imports to the EU accounted for just 5% of the total maize imports.
The November price at the end of last week finished at £157.75/t (€179.98/t) and dropped as far as £154.75/t (€176.55/t) on Tuesday (June 19). Wednesday saw an increase to £156.75/t (€178.84/t), while Thursday evening’s price reached £159/t (€181.40/t) and moved slightly to £159.75/t (€181.91/t) by Friday evening.
The MATIF moved similarly to the LIFFE price. The December price finished at €181.75/t last week. This price then dropped to €178.75/t on Monday and further again on Tuesday to €176.25/t.
Prices increased on Wednesday (June 20) to €178/t and hit €180.25/t at close of day on Thursday and Friday (June 21 and June 22).
The Chicago Board of Trade (CBOT) finished at 499c/bu (€157.92/t) on Friday of last week (June 15). The US price went down to 490c/bu (€155.07/t) on Monday (June 18) evening and hit a low of 477.75c/bu (€151.27/t) on Tuesday (June 19).
Prices began to recover on Wednesday (June 20), coming back up 10.5c/bu to 488.25c/bu (€154.44/t) and hitting 495.25c/bu (€155.89/t) on Thursday (June 22). However, on Friday evening that price was back to 491.25c/bu (€154.78/t).