Bearish outlook pushes wheat futures to two-month low
© Tim Scrivener UK feed wheat futures fell to a two-month low of £186/t on 15 August for the November contract, after some fairly bearish forecasting from the US Department of Agriculture (USDA) and larger crop estimates in Russia and Ukraine.
The USDA’s latest World Agricultural Supply and Demand Estimates report showed reduced global wheat production, lower consumption and decreased trade.
Global wheat supplies were forecast to be down by 4.3m tonnes because of smaller crops in the EU, Canada, and China.
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Arlan Suderman, chief commodities economist at advisory firm StoneX, said additional pressure on prices had come from larger-than-expected increases in the maize and soybean crop ratings released by the USDA, suggesting a recovery in those crops from stress caused by heat and lack of rain in late July.
The USDA said 59% of the US maize crop was rated as either good or excellent, up from 57% the previous week, while its good or excellent rating for soya beans was raised from 55% to 59%.
AHDB senior analyst Helen Plant, said the market had largely ignored the latest developments in the war after Russia fired warning shots at a grain vessel in the Black Sea.
Drone attacks on Ukrainian ports have also been reported, with damage inflicted on grain storage facilities.
Industry trader Dewing Grain suggested that prospects looked fairly bearish in the short term, with wheat markets under pressure, excluding events in the Black Sea.
The Russian wheat crop has been estimated at 88m tonnes by consultancy firm Ikar, up on the previous month’s forecast.
Meanwhile, Strategie Grains has cut its forecast for EU wheat production to 124.7m tonnes, down 1.44m tonnes on the previous month and below last year’s levels.
Traders at Frontier Agriculture said: “Cuts made in France are the main reason for the smaller EU crop, with it now down to 35.7m tonnes. Prolonged rainfall in July has stalled the French harvest in the north and this is the case for many north-western EU countries, impacting quality as well as yield.”
Ex-farm feed wheat prices collated by Farmers Weekly on 16 August ranged from £164/t in Hampshire to £185/t in Northumberland.
Demand from Africa
Grain consumption and demand in eastern Sub-Saharan Africa is expected to grow due to a combination of growing population, urbanisation, and dietary changes, according to a Rabobank report.
Vito Martielli, senior analyst at Rabobank, said the region was not self-sufficient in grains and relied on different sources of imports, with grain imports forecast to increase.
An additional 2m to 3m tonnes of wheat imports by 2035 will be needed to match demand, according to the report.