What’s driving grain prices lately? Grain market daily

• Nov-24 UK feed wheat futures closed at £216.00/t yesterday, down £2.35/t from Monday’s close.
• The domestic prices tracked global grain markets down yesterday, despite existing concerns over Russian output. Chicago wheat futures (Dec-24) ended yesterday’s session at $259.29/t, down $4.69/t. Similarly, Chicago maize futures declined $0.29/t yesterday to close at $181.89/t.
• Prices were generally weighed on by a strong rating of the US crop following release of the USDA crop progress report yesterday. More on this below.
• Paris rapeseed futures (Nov-24) fell €8.50/t yesterday, ending the session at €479.50/t, and tracking downward movements in soyabean and crude oil markets.

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Global grain futures are trending downwards following pressure from the Black Sea weather outlook, US crop progress report, and uncertainties around global demand.

Black Sea Output

Concerns about Russia’s wheat crop, due to unfavourable weather, have continued to influence international wheat prices. Recently, two domestic forecasters, IKAR and SovEcon, revised Russia’s wheat output estimates down by around 10.0 Mt. This pushed up global wheat prices to their highest point in ten months. However, the market eased off following some profit taking and forecasts of rainfall in certain parts of Russian, leading to a subsequent downward slide in prices.

According to a report by LSEG, Russia's forecast for this year's grain harvest, despite the May frosts, remains at 132 Mt, including 85 Mt of wheat. While grain exports in 2024/25 could total 60 Mt.

Crop Conditions

The recent USDA weekly crop progress report, released on Monday, added momentum to the downward pressure on global wheat prices. According to the report, 49% of the US winter wheat was rated good/excellent, marking a slight increase from 48% the week before and ahead of the 36% rating for the same period last year. Also, spring wheat condition was rated at 74% good/excellent, surpassing the previous year’s rating of 66%. 

The latest crop report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) was issued yesterday. The report forecasts a larger wheat crop in Australia which also fractionally added pressure to markets. Specifically, the area planted for winter crops in Australia is projected to be historically high for the 2024/25 season, with a slight increase to 23.6 Mha, 6% above the ten-year average up to 2023/24.

The report also projects a 12% increase in wheat production and a 7% rise in barley production, following notable increase in planting areas. Specifically, the wheat planting area is expected to grow by 3% to 12.7Mha, and the area for barley planting is projected to increase by 3% to 4.3 Mha.

Looking ahead

In the short term, the interplay between market forces and supply/demand dynamics will remain the primary influence on price trends.

A key factor to monitor is the weather forecast for the Black Sea region and its impact on crop production. Yesterday, the LSEG reported that Egypt and Algeria have purchased wheat amounting to 470 Kt and 800 Kt respectively, predominantly from the Black Sea, partly due to price competitiveness.

Crop progress reports from other major wheat producers such as the US, which is updated weekly, along with Canada, Australia, and the European Union, will be something to watch moving forward.

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