Weather in the Northern Hemisphere continues to underpin grain prices, particularly ongoing dryness in some of Europe's key wheat-producing regions. Much of Northern Europe, the Baltics and Southern Russia have seen very little rainfall with the latter receiving just 5-20mm this week, so crops are continually being stressed. Consultancy, SovEcon, said on Friday that despite some recent rain, the extended drought period left irreversible damage to some crops which will result in lower output.
Weather drives prices while USDA gives supply and demand insight
Weather in the Northern Hemisphere continues to underpin grain prices, particularly ongoing dryness in some of Europe's key wheat-producing regions. Much of Northern Europe, the Baltics and Southern Russia have seen very little rainfall with the latter receiving just 5-20mm this week, so crops are continually being stressed. Consultancy, SovEcon, said on Friday that despite some recent rain, the extended drought period left irreversible damage to some crops which will result in lower output.
Fortunately, some localised heavy rainfall in France and Southern Germany will go some way to alleviating underdeveloped crops but French consultancy, Agritel, said yesterday the recent wet weather had only stabilised (not improved) wheat yield potential. Crop ratings in France remain unchanged on the week at 57% good/excellent, although this is well down on 72% last year.
Tuesday's United States Department of Agriculture (USDA) report offered a first look at world 2020/21 supply and demand, and painted a largely bearish picture for grain. Global wheat production was raised four million tonnes, with the largest increases in Australia (up nine million tonnes to 24 million tonnes) and Russia (up 3.4 million tonnes to 77 million tonnes). Conversely, the EU figures show a significant drop-off in production of 11.78 million tonnes to 143 million tonnes, reflecting a lower harvested area and yield due to poor weather.
There's no doubt European weather watchers will continue to feed the bullish undertone to this market but, while demand remains suppressed and the rest of the world continues to plant next year's wheat and corn crops, it feels as though European markets will stay range-bound for the foreseeable future.
