Monday Market Briefing - 26th April 2021

Looking out the window onto a British arable farm, one could be forgiven for thinking the dry conditions affecting UK crops is the driver for the current high grain values. In fact, wheat conditions for crops exiting the winter period in the South are some of the best we have seen in the past decade. We need to look further afield to assess the effect of dry weather on spring sown crops globally.

Undoubtedly, it remains dry across most of the Northern Hemisphere; none more so than in the US Midwest where farmers are planning to plant corn.  Although the national planting progress stats report as average, we are just about to enter the critical period where the main 18 Midwestern States (producing over 80% of US corn and soybeans) should be planting.  Without rain in the 10-14 day forecast, operations are paused which if sustained, may lead to less corn and more soybeans planted this Spring. This would leave the global feed grain supply tight for the harvest 2021 season, as corn stocks have fallen due to similar droughts in Spring 2019 & 2020 curtailing corn planting.

Normally when the Northern Hemisphere is struggling with cyclical weather issues, production from South America comes to the rescue. Corn growing conditions in major areas in Brazil have dropped from 92% good/excellent to 62% good/excellent over the past two weeks. This is partly due to planting being completed late, as farmers waited for rains to sustain germinating crops. However, rainfall during the crop growing cycle has been low, and farmers are highly reliant on average/above average May rainfall to avoid yields being further reduced.

“Rain makes Grain” as the old adage goes, and current grain prices of around £180/MT ex-farm for new crop are likely to go into reverse should the US and Brazil receive timely rains for planting and crop development respectively. Light rains are forecast across Western Europe over the next ten days, but the saving grace for our winter wheat are the low temperatures preventing any drought stress and maintaining condition. However, new crop demand is still robust - China made a new purchase from the EU last week – this time of wheat, adding to their sizable haul of new crop barley purchases from France. As global grain demand is forecasted to rebound following coronavirus restriction disruptions, we will need a substantial shift in weather patterns to dampen any enthusiasm for feed grain values.

Have a good week,

Bartholomews Grain Marketing Team