Warm, dry weather depresses grain production

12-06-2020 | |
Photo: ANP
Photo: ANP

Wheat harvest expectations are adjusted somewhat downwards, corn is expected to come in, in large volumes from the fields, according to forecast. The physical market is driven by the supply.

The weather has a huge effect on the grain market in these days. For wheat, in the southern United States, where most winter wheat is grown, the warm and dry weather will slow production. There is a high pressure area in the Black Sea region, which means that water shortages remain a problem especially in the south of Russia. High expected temperatures around the Black Sea will also affect the quality of the wheat, which has not yet matured. The growers hold grain there, expecting the new harvest to be disappointing.

Futures market:
Overview of futures prices for: corn, wheat and soybean

Harvest forecast in EU & UK has been revised downwards

In the EU and the United Kingdom, the harvest forecast has been revised downwards due to drought. The harvest forecast for Ukraine has also been somewhat tempered. However, the forward prices of wheat did not develop the same last week. Paris again showed fluctuations and a slightly depressed trend, Chicago looked a bit more positive.

FAO expects large corn yield

The price for corn remained positive in Paris last week, declining slightly on Friday and is now under some pressure. The prospects for the new harvest are adjusted slightly downwards here and there, but according to the world food organization FAO, a very large corn yield is coming this season. The market price is driven by the current offer. Argentina still has logistical problems and farmers are holding corn there, reports the Netherlands Enterprise Agency (RVO.nl).

Dollar exchange rate favourable for US exports.

In the physical market, the US gain from the export rate that has become more favourable for exports is the euro versus the Brazilian real. Globally, corn and barley are increasing in price. Barley prices are being driven up by the expectation that Saudi Arabia will again open a large tender for the supply of feed barley, reports RVO.nl.

Jack Kwakman Freelance journalist
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