Raf Beyers, a business development and risk management consultant at United Specialists, visited the feeder markets with us during weeks 24 and 25 (June 12-25).
Wheat prices rise
Wheat prices continue to rise from June 1. Russian wheat rises less than European and American, which creates competitiveness.
“The United Nations (UN) is concerned about the grain corridor and has assessed that Russia will not extend it,” said Raf Beyers. “Meanwhile, Ukraine is fighting to protect its agricultural interests within the European Union (EU). For example, Ukraine believes that providing additional support to Polish farmers in exchange for grain flows from Ukraine to Poland violates international World Trade Organization (WTO) rules.
There will be negative changes in European harvest estimates in the next 2 weeks. Hopes of rain in Europe will limit yield losses. For now, yield estimates for European wheat have been cut by 1%. Wheat prices are up almost 8% in a week and +13% from a month ago.
Maize is affected by drought
A drought in the US Corn Belt (US) is burning up the market. Maize and soybeans are especially vulnerable to these extreme conditions. As a result, the level of US corn has fallen sharply in a week. It fell to only 55% good/excellent. Only 1988 and 1992 were worse at this time of year. Disaster year 2012 was even better, but July was very dry.
The El Niño weather phenomenon will bring more rain to the Northern Hemisphere in the summer, but optimism has been replaced by concern. Funds have been keeping an eye on the US drought, and their buying behavior has been observed. China’s demand for corn remains a big question mark. Prices are expected to increase further in the short term. Corn was up 6% for the week and almost +15% from last month.
Rapeseed price hike
Rapseed went from 386 euros to 473 euros/ton in early June to mid-June. This is a very strong price increase. After a price rally in mid-June, vegetable oils lost ground following an announcement that biofuel orders would decline for the next few years in the United States.
Old-harvest rapeseed scrap is now very scarce and prices have risen. The question is whether the arrival of the new harvest will eventually cause additional pressure. A large harvest is expected in Western Europe, not only because of the large acreage, but also because of the high yield. As for Canada, it looks at the coffee grounds. Consumption of rapeseed meal has been increasing over the years, helped by more expensive soy and higher milk prices.
Drought in the U.S. has had an impact on soy
“After soybean prices, soybean meal prices are now rising because of the drought in the United States,” says Raf Byers. “For soybeans, however, the critical growth stage is later than for corn. August in particular should provide enough rain for soybeans. More than 51% of U.S. soybean acres are already in drought, up from 9% last year. This week, Illinois had a 33% good/excellent crop. The condition scored.These crop conditions are the lowest since 1988.This situation is heating up the markets and rains are urgently needed to calm the situation.
Low soybean stocks are sensitive to drought messages. This can quickly drive up prices. It’s still a long way off, but if the harvest in the U.S. disappoints, the coming winter will be very tight again.
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