27 Jun 2014
Grain Market UpdateGrain
Grain Market Update – 27 June 2014
EU grain output is forecast to increase by 6.8mt (2.3%) this harvest. The bulk of the increase will come from soft wheat production which is expected to rise by 7.4mt (5.6%) to 140mt. The EU is expected to pass out the US as the world’s number 1 wheat exporter for the 2014/15 season. EU maize output is also forecast to increase, up by 4.7mt (+7.3%). However, barley production is forecast to fall by 4.6mt (-7.8%) to 54.5mt. Significant recovery is seen in UK wheat production which is expected to produce an additional 2.9mt. The UK is expected to become a net exporter of wheat after an absence of two years from the export market but it will have to compete head on against French wheat to regain market share into traditional markets such as Spain, Portugal and Italy as well as the Netherlands. French wheat is also forecast to increase by an additional 1.6mt. Increased wheat supplies are also seen coming from Poland, Denmark, Hungary, Slovakia, Germany and the Netherlands. Spanish production is forecast to fall by 1.7mt. For European maize production significant increases are forecast for Hungary +2.3mt, France +1.2mt, Germany +1.1mt while Romanian output is expected to fall by 1.1mt. On the barley front Spanish production in the southern part of the country was badly affected by a prolonged drought and output is forecast to fall by 3.3mt. UK production is also expected to fall significantly, down by 1.2mt but this was due to a switch back to wheat plantings.
Speculative investors remain negative on price direction for grains and have gone increasingly short on contracts in anticipation of further price falls. However, this strategy presumes a significant increase in world maize yields and supplies for the 2014/15 crop year despite the fact that the maize harvest is still a long way out. Trade was relatively subdued this week as investors wait for the release of the USDA’s world crop report on the 30th of June.
Irish dried spot wheat prices traded lower again this week ranging from €197/t to €199/t compared to €199 to €201/t last week. Barley is also lower trading from €170/t to €172/t down €2/t to €3/t on last week’s quotes of €172/t to €175/t. New crop barley and wheat prices are also weaker. New crop wheat for November collection is down €3/t on the week trading from €180/t to €182/t. New crop barley for October payment is down €2/t on the week trading from€168/t to €170/t compared to €170/t to €172/t the previous week. Old crop spot maize is trading €2/t lower at €178/t but new crop is holding steady at €180/t.