Special Edition: Grain market movements
CRM strikes cautious note over La Niña, forecasts ample feed wheat from Australia
“Following the El Niño period, there could potentially be a threatening La Niña in January, impacting maize output in the core growing regions of Argentina,” Benjamin Bodart, director, CRM group, told us today.
Argentine maize is planted from September to mid-January, and harvested March through August.
Hot and dry weather conditions in that Latin American country are associated with the La Niña climate pattern, thus such an event could reduce maize yields in that part of the world.
This month saw US government forecasts indicating the chance of a La Niña event occurring has increased.
Meanwhile the slow pace of shipments from the Black Sea region has been increasing pressure on the maize market and causing challenges for EU feed compounders, said Bodart.
“The Euronext has just seen a rally on maize prices due to logistical issues in Ukraine holding up maize exports. But it is difficult to be overly bullish about that market due to the size of global maize stocks,” he said.
Dry weather in France, UK
However, dry weather conditions in Europe are leading to more bearish sentiment about the wheat market, with farmers in France, particularly in the northern part of that country, concerned about wheat planting conditions. ”While the optimal planting period is not yet over, French wheat farmers are anxious about the impact of such dry weather on the 2017 crop,” said Bodart.
Farmers in the UK are concerned as well. “The precipitation levels in Kent currently are 70% below normal for this period,” said the CRM analyst.
Switching to another region, harvesting has just started in Australia, and Bodart said the latest reports are indicating a high quantity but low quality wheat crop. “The crop could be above the five year average but due to quality challenges the feed sector looks likely to gain – there could be plenty more feed wheat available as a result. The past four weeks in eastern Australia have seen a high rate of precipitation,” added the analyst.
He reckons the global market will be able to access ample supplies of feed barley from Australia also.
Global soybean supplies will likely increase for the fourth consecutive year, said CRM in its weekly round-up of grain market developments.
“Although this is currently reflected in the price, there is room for prices to fall further as we see confirmation of further supplies coming to the market.
“For now, US soybean exports will satisfy around 70% of global demand through to February when it will be down to South America,” said the reviewers.