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World Grain Market Analysis: 14th August 2020

World wheat markets have slipped lower during the past four weeks. The US Chicago Board of Trade (CBOT) wheat futures lost 7.5% of their value as wheat production prospects for 3 of the world’s primary wheat producers continued to improve.

The most notable of these was Russia where a big crop was expected following near record winter wheat planting. However early cut wheat fields in the southern regions had yields 27% lower than the previous year, having suffered from long spells of dry hot weather conditions. This means crop estimates fell to 75 million tonnes and helped support world prices.

In contrast to recent years, as the harvest progressed northwards, yields continued to improve bringing the average above last year, meaning analysts are revising their estimates to 81 million tonnes, potentially their second largest wheat crop on record.

Following three drought years Australian farmers have enjoyed widespread rains and maximised their wheat drilling. Analysts see a potential 26 million tonne crop up from 15mmt last year and if realised this will see Australia being an aggressive exporter into Asian markets in the new year following their harvest.

Canada is also enjoying near ideal weather for crop development and, following a recent crop tour, FarmLink Marketing Solutions predicted the Canadian wheat harvest (including durum) would reach almost 39 million tonnes, surpassing the previous record of 37.6 million tonnes set in 2013!

Adding to these wheat production increases is an expected jump in the US corn crop to 388 million tonnes (up 42 million tonnes on last year).

However, there are a number of bullish factors in play that are likely to keep markets volatile.

Analysts Strategie Grains see the EU-28 wheat crop falling to just 128 million tonnes which is 19 million tonnes lower than last year. This is mainly due to the lower winter wheat planting as a result of excessive rain in the UK and France, (which I am sure we all remember)
France will see its crop 10 million tonnes lower than last year and less than 30 million tonnes total.
Prolonged dry warm weather has also impacted on Romania where the crop is seen 40% lower (just over 5 million tonnes).
The German crop is also seen down 1.5 million tonnes on last year.
Wheat crops in southern Ukraine and Kazakhstan have also suffered from heat and it is thought the amount available for Ukraine to export will be 17.2 million tonnes which is 4 million tonnes lower than last year.

The 2020 UK wheat production situation is unprecedented! Plantings at 25% lower on the year according to the AHDB survey and the indifferent drilling patterns and damage done during the hot dry month of May has impacted on yields. We have seen very few comparable with last year and the vast majority are lower and some by as much as 50%! Average UK yields could be 25% lower than last year and that signals a crop of little more than 9 million tonnes.

The UK wheat import requirement will be significant, and logistically challenging so this will create opportunities during the season for our Camgrain pool marketing.

Simon Ingle, Marketing Director (Camgrain)

https://www.frontierag.co.uk/grain-marketing

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