Grain markets around the world have continued to trade higher as the weather-related rally intensifies speculative buying, driving markets to new contract highs.
In its latest market report, ADM Agriculture pointed to continued dryness in Brazil threatening the country’s second corn crop, with the potential impact of increasing export demand for US corn, which is something the US can ill afford at a time when its weather remains far from ideal.
“These weather issues in the US are already being highlighted in winter wheat crops, where drought-like conditions remain an issue across the Southern and Northern Plains,” said Jonathan Lane, ADM Agriculture’s head of grain trading. “We have seen the weekly USDA crop rating fall sharply week on week.
“In Europe, the cooler and drier weather continues to affect crop development and is delaying spring sowings. In contrast, areas in Russia have received too much rain. Analyst IKAR has downgraded its forecast for Russia’s 2021 wheat crop to 79.5 Mt from 81 Mt, as farmers will need to re-sow wheat across a large area of the country’s central region.
“The upward market march has seen UK new-crop futures put on £10 over the past week, and the scale of the global rally has been impressive. However, markets will be vulnerable to bouts of profit-taking and will take a breather at some point.
“We are, and will probably remain, in a weather market for some time, with any forecast of rain in the US and EU growing areas seen as negative to pricing and less-than-expected or no rain seen as positive.”
Lane concluded: “We may not yet have seen the top of the new-crop market, although prices are at historically high levels for the time of year. A little and often marketing strategy remains a sensible option for UK growers.”