What’s moving wheat prices? Grain market daily

• UK feed wheat futures (Nov-23) fell back £1.55/t yesterday, to close at £201.95/t. Nov-24 futures dropped back only £0.60/t over the same period, to £207.20/t.
• Domestic futures followed Paris futures movements yesterday, pressured by expectations cheaper Russian wheat would cover the majority of Algeria’s tender. Though yesterday saw US markets climbing slightly, after Monday market closure for Juneteenth.
• Today, the Kremlin restated the position that there are ‘no grounds’ to extend the Black Sea Initiative (grain deal), with Russia looking to remove obstacles for their own fertiliser and grain exports.
• Paris rapeseed futures (Nov-23) closed at €473.00/t yesterday, down €1.75/t from Monday’s close. Pressure was seen yesterday across the wider oil and vegetable oil market, despite gains for Chicago soyabeans on dry Midwest weather.

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?

Dry conditions in focus

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 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.

Why is US maize news important?

US dryness has been a factor driving grain and oilseed markets in recent days. So why is US maize important? Well, it is key to look at the context of global supply and demand of total grains.

The new season (2023/24), USDA forecast total grain production to rise 3%, mostly on account of a 6% increase in global maize production. A larger US maize crop accounts for over half of this global maize production increase, and therefore drought impact to the maize crop is followed closely by the market. Global wheat production too is due to rise (forecast up 1%), though barley production is expected lower year-on-year (forecast down 3%). Total global grain consumption is due to rise also for the new season, currently up 2%. However, with supply rising higher than demand, a global feed grain surplus is currently expected, after this season’s deficit (2022/23).

So, what does this mean for price direction?

While total grain supply currently looks sufficient for current demand forecasts, large changes in key maize and wheat producers, like the US and EU, could impact this balance, and the reason for us adjusting our longer-term price outlook in Market Report on Monday. The market will continue to follow global developments closely, especially as Northern Hemisphere harvest progresses.

However, our domestic wheat supply into the new season is expected to be larger from this season, considering the large carry-in stock forecast, plus a larger crop year-on-year. Though UK weather will be watched closely for yields and quality, with another crop development report due soon, we are still expecting good availability into the new season. This is something to consider in how we domestically price to global markets in the new season.

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