Dry conditions starting to worry traders

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Last week saw UK feed wheat (Nov-23) futures climb near 4%. So far this week markets are mixed, with small gains seen again on Monday, but a small fall seen yesterday. UK feed wheat futures continue to follow the broad movements seen in Chicago and Paris wheat futures, as well as Chicago maize futures. So, why has wheat seen support recently? And will this continue?

Megan Hesketh senior analyst arable AHDB points out: “Dry weather concerns across the globe and continued worries on whether the Black Sea Initiative (Ukrainian export corridor) will be extended, is building some uncertainty into new season grain supply, supporting price levels.

Dry conditions a worry

“Dry and drought conditions across the US continue to be a key concern for global grain and oilseed supply. Yesterday, saw the release of the latest USDA crop conditions, to week ending 18 June. Good to excellent conditions fell week-on-week for maize (-6 percentage points (pp)), spring wheat (-9 pp) and soyabean (-5 pp) crops. Though some rain is due over the next few weeks across the Midwest, this is still below seasonal averages.

“EU weather concerns also continue, with drought conditions in southern Spain and Portugal, and rainfall deficits noted across much of the North European Plain (European Commission). In the latest MARS report, the European Commission trimmed some grain yield potential, though total wheat, barley, and maize forecast yields remain above the previous five-year average. Though to note, the continent is still expecting to see a large wheat balance into the new season, considering higher beginning stocks and crop expectations.”

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