Drop in grain prices on improved supply prospects, recovery in EU rapeseed output likely

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Australia’s 2020/21 wheat crop is looking increasingly positive, it was raised by another 2.3Mt last week by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) – its estimate was 31.17Mt, a jump from September’s 28.91Mt forecast.  

Statistics Canada said the country’s wheat crop will be the largest in seven years, while Russia’s export quota for February to June could also be increased by 1Mt, said the UK grain and oilseeds market analysts.

“These three factors add to the confidence in global wheat supplies this season. There are still worries about 2021/22 wheat crops but large stocks would partly cushion a possible fall in production.”

Global maize demand is already expected to exceed supply this season. Recent rain in South America has helped crops in the short term, taking some of the heat out of the market but more is needed. Worldwide maize supplies are already tight, keeping an underlying level of support in maize and so feed grain markets, reported the team​.

More rain is expected for the some of the key growing areas in Brazil this week but parts of Argentina are expected to remain mostly dry, observed the market specialists.

Referencing the large global barley crops, the analysts note feed demand for that raw material is up, but the outlook for malting demand is more pessimistic, pending the lifting of COVID-19 restrictions.

While the next WASDE report from the US Department of Agriculture (USDA) is due to be released on Thursday, the factors influencing the market right now is the weather in South America and the rate of grain and oilseeds imports, particularly by China, as per the AHDB outlook.

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