Monday Market Briefing - 16th May 2022

Over the weekend, India banned wheat exports due to an extended heatwave curtailing output and pushing domestic prices to a record high. Only six weeks ago, Indian exports were thought to fill some of the gap for importing nations (including Egypt) with the absence of Black Sea wheat supply. Other exporters such as France are nervous to offer more wheat for sale due to dry weather persisting across Western Europe. France, the largest EU wheat producer, downgraded the condition of their wheat crop from 89% to 82% good/excellent, although recent thunderstorms have provided some relief. Strategie Grains reported that substantial rains are needed to avoid further crop production losses.

Elsewhere, corn planting in the US Midwest remains sluggish due to wet soil conditions and cool temperatures. Ongoing delays will discourage farmers from growing corn with a yield penalty, so instead growers are likely to switch to soybeans. This will put further pressure on US feed grain stocks, already at an all-time low.

Fundamentally, the grains market remains supportive as long as the Ukrainian/Russian conflict continues. Last week’s USDA report confirmed the bullish outlook for wheat. However, with new crop fertiliser prices released, UK growers are looking to take cover with some deferred grain sales for crop 2022 and 2023.

Have a good week.