Market Report: Grain markets rally on corn forecast

Grain prices have jumped again over the past week, buoyed by a bullish report from the US Department of Agriculture, which slashed its US maize forecast.

Last week’s report cut maize yields by a record 13m tonnes, resulting in the tightest stocks for 14 years. American futures reacted by hitting their daily upward limits, dragging wheat and soya values with them.

London wheat futures followed suit, reaching £170/t for November on Monday (11 October), before easing to £164/t on Tuesday – £154/t ex-farm; £10/t up on the week. However, with most compounders well covered pre-Christmas, it was hard to sell physical grain in the nearby market, said traders. New-crop markets also improved, with November 2011 futures rising by £5.50/t in the week to Tuesday’s close, to £138/t.

Rapeseed prices have shadowed rising soya markets, with the US crop cut by 2m tonnes against last month’s report. UK spot values rose by £10/t on the week, to about £316/t ex-farm. Although USDA forecast a massive 440m-tonne world oilseed crop, with hefty carryover stocks, values had to compete against maize and wheat to encourage South American plantings, and would therefore continue to fluctuate, USDA said.