7 August 2018
Continued concern for dry weather affecting grains meant the markets remained bullish last week. Global wheat futures rose last week following crop concerns globally which could further tighten supplies in future months.
A significant reduction in the anticipated size of the German grain harvest was made by the German Farm Association (DBV) last week following prolonged hot and dry weather. Winter wheat harvest is nearing completion and yields are expected to be 20% below last year at 6.0 t/ha. This represents a possible production of 18Mt, down from 24.1Mt in 2017. Total grain production is expected to fall by 9.5Mt from last year with 36Mt anticipated.
Dry weather in Australia during and following winter crop planting in Eastern regions is continuing to cause concern for crops.
Following last year’s decade-low wheat harvest, this year has got off to an even worse start, with some in the trade speculating that production could be well below ABARES’s 21.9Mt June estimate if rain does not arrive.
The UK November 2018 feed wheat futures contract closed at a contract high of £192.30/t last Thursday (2 August). This followed the global bullish market trends following challenging weather in Europe, Russia and Australia.
Paris rapeseed futures rose on the week as continued concern around the European crop and reports of disappointing yields lent support to prices. Similarly UK delivered rapeseed prices rose, as increasing reports of small seed size and reduced yields continued to come forward. Chicago soyabean prices rose midweek before rhetoric between the US and China once again escalated tensions over the trade dispute.
The German Farmer Association (DBV) released yield estimates of just under 2.6t/ha for the German winter rapeseed crop. This is a 21% reduction from 2017 yields and 32% below the five year average. As such the Association is now estimating that the 2018 German winter rapeseed production will fall to 3.3Mt, a 24% fall from 2017 and 1.9Mt below the five year average.