Wheat prices decline as crop prospects continue to improve

This time last week I reported a slight calming in the downward trend we have seen dominate new crop grain prices over the last few months. The retreat seemed to have come to a momentary halt whilst grain prices awaited further direction – what do the early Black Sea Yields indicate? How much maize corn has America actually drilled? How our own winter cereal crops developing?

A week on and we have fresh news which addresses all three of the above. Unfortunately for you farm-sellers, it doesn’t exactly make the most pleasant reading.

Firstly, the Black Sea harvest is beginning to gather momentum after more than two weeks of combining in Southern regions. Russia now has an estimated 2M/T of winter wheat in the shed whilst winter barley tonnages stand around the 1.8M/T mark. ‘Official’ winter wheat yields (according to the Agricultural Ministry over there) are currently around the 3.8T/Ha mark – an increase of 33% on last year. Another week of warm sunshine and bright skies is forecast for south-west Russia which should allow progress to continue.

Over in the Ukraine, 1.5M/T of wheat has now been harvested with yields said to be around ‘twice those of last year’ (according to the technically ‘unofficial’ world of twitter). We should know more by this time week as progress continues.

Secondly, with regard to what really is happening in America, last week brought the release of the latest sowing review from the US Department of Agriculture (USDA). Just to quickly re-cap, previous reviews initially stated that a record 38M/Ha were to be drilled with maize corn; a figure which was then later revised following delays caused by wet weather.

The latest figures have seen a further revision to the numbers, but this time with an increase. Despite the delays, American growers have in fact managed to sow the original area intended plus a little extra – total hectares drilled now stands at 39.4M/Ha, the largest acreage since 1936. Consequently American maize corn values fell to their lowest level in over two years on Monday.

Alongside the forecast the USDA reminded that ‘we still have a long way to go until maize corn is in the barn’, adding that until that point ‘crops remain hostage to whatever the weather throws at them’.

For now though there is serious potential for a bumper maize corn harvest this year – and it will take a pretty significant weather event to persuade the grain markets otherwise.

Here in the UK our own winter wheat appear to be ‘progressing well’ according to ADAS and although the range of growth stages is much wider this year due to the protracted drilling window, the crop is playing ‘catch-up quite nicely’. Northern winter wheat crops are (rather optimistically) around 4 weeks away from harvesting whilst crops further south could be ready for combining in as little as three weeks (apparently).

New crop feed wheat values then have retreated to somewhere between £162-65/T ex-farm for November collection. Immediate harvest movement would probably offer £5/T less.

For those of you with old crop feed wheat left to sell, buyers (other than ringing to say ‘I told you so’) are pretty thin on the ground at the minute. Late July collection should make around £162/T ex-farm.