Grain prices have continued to fall this week, although the pace of price declines has slowed considerably. Corn also fell over the week. The September wheat contract closed yesterday at 238.50 euros/t. Corn closed at 212.50 euros/t, which is now the most traded November contract. The wheat contracts on the CBoT fared similarly. Corn on the CBoT, on the other hand, made gains over the week.
This week, market participants focused primarily on production estimates for the coming harvest. The USDA published its June WASDE and reduced global production expectations for the coming season by almost 8 million tons. In particular, the red pencil was applied in Russia, and the USDA analysts also expect lower harvest volumes for Ukraine than in the May WASDE. The harvest forecast for Europe has also been adjusted downwards. Instead of the previous forecast of 132 million tons, the Ministry of Agriculture now expects 130.5 million tons. Nevertheless, the EU's export potential is estimated to be slightly higher at 35 million tons. Forecasts for the USA and Argentina are higher than the last estimate. Overall, global wheat production is likely to be slightly higher than in 2023/24. In Russia, the damage caused by the cold spell in April is slowly but surely becoming apparent. Market participants assume that between 10 and 15 percent of stocks have been permanently affected. However, according to the ministry in Moscow, many areas have already been plowed up and replanted with spring wheat. The industry association Cocereal, which unites European grain traders, largely confirmed its previous harvest forecast for 2024/25. The umbrella organization sees the common wheat harvest at 122.6 million tonnes, which would correspond to a year-on-year decline of 2.7%. Strategie Grains, on the other hand, lowered its forecast for the European harvest by 1.7 million tons and now expects 121.8 million tons of common wheat. This would make the European harvest the smallest in the past four years. Europe's exports have reached a volume of 28.57 million tons as of 9.6. and are thus further behind the previous year's result at this time. In 2022/23, 30.30 million tons of common wheat were exported to third countries by the 50th calendar week of the marketing year. Barley was also exported significantly less than in 2022/23.
The grain trade association Cocereal estimates the upcoming European grain maize production at 64.8 million tons, thereby increasing its previous forecast by around 1.5%. There are also signs of improved yields for the second maize harvest of the season in Brazil. According to the agricultural authority Conab, it has increased its forecast by 2.3% to 88.1 million tons. Nevertheless, total production is likely to be around 14% lower than in 2023. In the WASDE report, the USDA increased the global production outlook slightly. Higher volumes are expected in Ukraine, for example. Corn prices were also supported by good export demand and the threat of a heatwave in the Midwest is providing an additional boost for corn contracts in Chicago.
ZMP Live Expert Opinion
Grain prices have been under pressure this week. Weather developments in Europe are mostly good and growing conditions in Russia and Ukraine have also improved recently, while US winter wheat stocks and maize plants are likely to struggle with heat in the coming days. What remains is the strong international competition. Wheat prices do not seem to have much room to rise at the moment.
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