Mid-week market update: Grain market daily

• UK feed wheat futures (Nov-25) closed at an 18-day high yesterday, gaining £3.50/t from Monday’s close to settle at £183.95/t. Domestic wheat prices tracked global markets higher, driven by short covering amid rising crop risks in key producing regions (more details below)
• Paris rapeseed futures (Nov-25) settled at €492.25/t, up €3.50/t. European markets tracked gains in Winnipeg canola futures, supported by concerns over tightening old crop stocks following strong demand

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Wheat markets are being shaped this week by changing weather and questions over crop conditions. With global and domestic wheat markets bouncing back yesterday, we take a closer look at the latest developments in key growing regions.

Unexpected drop in US crop conditions

In its latest crop progress report, the USDA reported a decline in winter wheat conditions, with 52% of the crop rated good or excellent as at 19 June, down two percentage points from last week.

While this is the highest score for this point since 2020, analysts were expecting ratings to remain unchanged (LSEG). Recent rainfall has offered some relief across key growing states in the US, but this fall in crop conditions has started to raise questions over the size of this year’s crop.

Dry conditions in Europe

In parts of north Germany, north France, Denmark, Poland and Sweden dry conditions are hindering wheat crops. Forecasts suggest possible rainfall by the weekend, which could improve conditions if realized. 

Russia’s prolonged drought

In Rostov, Russia’s top grain producing region, a farming emergency has been declared, due to the impact of spring frosts and prolonged drought. This mirrors last year’s conditions, which led to a 38% drop in wheat output from the region (LSEG). Recent rains have slightly improved conditions, but more is needed to see a significant improvement.

Hot weather in China

China’s weather service has warned that hot, dry winds could damage wheat crops in Henan, one of the country’s main wheat-growing areas. If damage is caused, could China’s import requirements increase?

Summary

The weather watch continues, with markets remaining sensitive to weather developments in key producing nations. With the unexpected slight fall in US crop conditions and concerns developing elsewhere, it is worth keeping a close eye on upcoming updates and crop condition reports. These will likely play a big role in where prices head in the weeks to come.

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