Posted on September, 12, 2024 at 06:08 am
Global grain markets have fluctuated lately due to a combination of factors such as adverse weather, cuts to production estimates, rising global demand, export dynamics and trade tensions. We reviewed these factors in detail below.
The recent dry weather in the US Midwest has notably influenced global grain prices. The percentage of US crops in drought has noticeably increased as of late, with 13% of the maize area now under drought conditions. Also, drought has led to a downward revision in crop yields in Europe (see below). Another factor to watch is the hot and dry conditions in central Brazil. This could delay soybean planting and potentially push back the second maize planting.
Following reduced crop yield estimates by the EU crop monitoring service (MARS) on 26 August, the EU commission revised its August crop estimates downward for wheat, maize and barley compared to July. Similarly, LSEG today reduced its 2024/25 EU-27 maize production to 60.3 Mt due to droughts in southeastern Europe. Also today, consultancy firm IKAR, cut its forecast for Russia's wheat crop to 82.2 Mt from 83.8 Mt on adverse weather in Volga, Urals, and Siberia. The USDA WASDE report due out on Thursday will be a key watchpoint regarding global grain supplies.
Global demand for grains has remained firm, as shown by increased international tenders, a surge in Chinese imports, and stronger-than-expected US export sales. These factors have supported higher prices for maize and soybeans. China’s soyabeans import was at record 12.4 Mt in August. The feed sector is also seeing increased demand, with Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) seeking 65 Kt of feed wheat and 25 Kt of feed barley to be loaded by 31 December.
The robust pace of wheat exports from the Black Sea region has kept prices stable despite production cuts. Russian wheat exporters continue to offer supplies at highly competitive prices, while shipments from Ukraine have also remained strong. According to Ukraine’s agriculture ministry, grain exports for the 2024/25 season have risen to 7.6 Mt as of 9 September, up from 5.1 Mt at the same point last year.
China announced on Monday a one-year anti-dumping investigation into imports of Canadian canola. This follows Canada’s decision to impose tariffs on Chinese electric vehicles and other products. This development has supported soybean prices, as it’s believed that China, the world’s largest buyer of soybeans, might further increase purchases of the alternative oilseed.
Source: AHDB