Inside Grains & Commodities

European feed grain market remains very strong

20 August 2018 - Niels van der Boom

Feed commodities such as wheat, grain maize and barley continue to record high prices. In the case of maize, it is mainly uncertainty that reigns, because the harvest has not yet started. In the United States (US) a top harvest is expected, against everyone's expectations.

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The program WASDE report from the American Department of Agriculture (USDA) (week 33) came with incredibly high figures for corn yields. This clearly results in a negative trend (bearish) in this market. On the CBoT in Chicago, the contract traded around $143 per tonne, before closing the week slightly lower.

In Europe, the corn price remains strong. The November contract rose by €5 to close the week at €190 per tonne. However, on Monday August 20 it will have to give up something, just as is the case for wheat. The September contract for wheat on the Matif is trading below €210 per tonne again.

This is what keeps the grain market busy:

  • The drought in the European Union (EU) and the Black Sea region.
  • The possible export restrictions for Russian wheat.
  • And a low euro rate versus a strong dollar.
  • The drought in Canada.
  • Developments in grain and oilseed rape in Australia.
  • The beginning developments in rapeseed in Europe.

The price of feed barley shadows that of wheat. This means that barley prices have also risen in recent weeks. In the Netherlands, prices are quoted between €190 and €209 per tonne. This has stabilized the price level. Following the low spring barley yields, the feed barley price in the United Kingdom (UK) is rising sharply. They pay €180 to €190 per ton, which was €1 per ton 160 month ago. The price of malting barley, including premium, amounts to €225 per tonne.

Oilseeds
With soy, the sounds are something more positiveafter the US and China sit down again this fall. Meanwhile, Brazil's soy supply is being depleted by demand from China. Rapeseed, which also contains oil, saw price formation moderate slightly, after a long period of price increases. In Canada the harvest is starting to get underway in full swing. It is very dry in the main growing regions, which means lower yields are expected. Australia also remains an uncertain factor.

Within the EU there are concerns about the development of oilseed rape crops in the UK, Germany and France. In the long term, cool weather is expected, but one with little precipitation. Sufficient precipitation has not fallen everywhere to allow the newly sown rapeseed to germinate well. If the drought continues until well into September, the sowing of barley and wheat will also be at risk.

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