Monday Market Briefing - 5th July 2021

Last week’s USDA report increased planted areas of US corn and soybeans, but failed to meet market expectations which justified a strong rally in it’s wake. The USDA should eventually confirm larger crop areas later in the season, but is understandably nervous regarding hot & dry weather in parts of the Midwest affecting corn development during a critical period of growth. Similarly, the extreme temperatures in western Canada are also affecting crops, leading to the poorest condition of spring-sown wheat since 1988. This seems fairly ironic to UK wheat growers in the South wishing for some dry weather to encourage ripening.

The report also highlighted a severe drawdown in global grain stocks which has a greater argument in keeping a floor in feed grain prices. Previous price spikes over the past 20 years have all been Supply-led – or more accurately a lack of Supply-led – and subsequent global wheat values rallied to around £200/MT ex farm to solve the shortage. With no buffer in grain stocks, we believe this rally is Demand-led, with larger consumption required in China heavily dependent on ever increasing bumper crops.

Recent rains in May & June are leading to higher forecasted yields for winter wheat, and growers must ensure they have sufficient harvest storage commitments. This week we are expecting more changeable weather, turning warmer into the weekend. This should help turn the winter barley, but in most cases, barley crops are 7-10 days late this season.

Have a good week.