Global wheat markets have continued to be under pressure this week. Improving crop prospects across the northern hemisphere are leading to a sustained reversal in US and European wheat markets, said Peter Collier, senior market advisor, CRM Agri.
A big relief for production fears next season have been rainfall forecasts across key spring wheat regions in the US and Canada, which, until recently, have been exceptionally dry, he told this publication.
In Russia, spring wheat confidence is high; by today [May 20], spring wheat has been sown on an area of 8.2 million hectares or 64.5% of the forecasted area, and there is an overall expectation for an increase in spring wheat area to 12.7Mha, he said.
Soybean markets have also been coming under pressure amid a general decline in commodity markets, falling back from the US$16/bushel price peak, noted the analyst.
“US planting progress is well ahead of average having reached 61% complete late last week, and the significant recent and forecast rainfall will aid crop development especially in northern US states.”
Chinese corn demand unabated
US weekly export sales reported further large purchases of corn, with near 11MT having recently been sold to China for the 2021/22 marketing year, he said.
Corn prices recovered by 1.7% on the news and wider global grain markets followed suit.
Overall, Chinese corn will remain the wild card for grain markets next season, commented Collier.
Looking ahead to next season, and the USDA is estimating a continued need for 26MT of corn imports, he reported. However, this is far from certain and will be one of the predominant drivers of both corn and wheat prices next season, said the grain and oilseed market specialist.
“China keeps its cards close to its chest in terms of reliable supply and demand information, if even China knows the full truth.
“In our opinion, a combined import requirement of 26MT in 2020/21 and another 26MT in 2021/22 is an overly bullish approach given the large volume of outstanding sales and incentive for Chinese corn production next season.
“However, this is not, therefore, a bearish global corn market; US stocks remain tight and can’t afford to fall back currently and allow increasing demand.”