Grain prices rise on the back of weather concerns

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Ongoing weather concerns for key exporting countries have seen grain prices increase further. The current AHDB Grain Market Report sees new crop futures (Nov-24) at £212.80/t. It is down slightly from earlier in the week but up from the closing price of £209.15/t ahead of the May Day Bank Holiday.

Russian forecaster IKAR trimmed its crop forecast from 93.0 Mt to 91.0 Mt. This is now slightly below 2023’s crop of 91.6 Mt (Reuters). Buying by speculative traders and maize crop concerns also contributed.

New crop Paris rapeseed futures (Nov-24) also gained over the same period, currently standing at €487.75/t. Again, this was weather-related with rain in Brazil, fuelling concerns over crop conditions. Estimates suggest that 40% of the soyabean crop remains to be harvested.

USDA predictions due

Later today the USDA releases its first predictions for global grain and oilseeds supply and demand in 2024/25.

A poll by Reuters shows that the market expects the USDA to forecast global end of 2024/25 stocks for wheat, maize and soyabeans above revised 2023/24 levels (LSEG). Reuters polls a range of market participants and forecasters, and as expected there’s often a range of views.

For the first 2024/25 predictions, all those polled expect the USDA to show a year-on-year rise in soyabean stocks. But for wheat there’s sharply contrasting opinions. Some participants expect year-on-year rises in global wheat stocks, while others, such as StoneX, predict global wheat stocks to tighten considerably.

Those polled also expect the USDA to predict higher US soyabean and wheat production and US stocks in 2024/25. But for maize, while a smaller US crop is expected, there’s a range of views about what this could mean for US stocks.

The USDA will also update its figures for 2023/24. While the focus is often on the new crop figures, old crop updates can impact carry-over stocks and be influential.

A key area of interest is South American maize and soyabean production. There’s currently a wide gap between the USDA’s estimates and local forecasts. For maize, this gap could mean the difference between a well-supplied global maize market and a more tightly supplied one.

The market is expecting the USDA to trim its forecasts for Brazilian and Argentinian production. However, expectations would still be some way above local forecasts. For example, the Reuters poll shows the market is expecting the USDA to cut the Argentinian maize crop from 55.0 Mt to 52.1 Mt. However, the Rosario Grain Exchange has already cut its forecast to 47.5 Mt.

The South American crop expectations likely factor into the expected cuts to global maize and soyabean stocks at the end of 2023/24. Global wheat stocks are also expected to tighten.

Market impact

This range of views and uncertainty opens the door for unpredictable reactions to tomorrow’s report, and volatile prices. While largely theoretical at this stage in the season, the USDA’s predictions can often set the tone for the coming months.

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