Feed grain values have experienced huge volatility over the past six weeks; UK wheat futures increasing from £173 to £195, before returning to £173 this morning. Weather concerns delayed planting in the US, and drove global feed grains (corn) prices higher – exacerbated by drought-like conditions in Brazil reducing yield. Last week, US weather forecasts improved including an encouraging 10-14 day outlook to achieve the USDA’s record corn yield forecast. As corn prices and gross margins remain attractive for the US farmer, we would also expect more acres to be brought back into production – potentially at the expense of soybeans.

The rally in corn prices has not gone unnoticed by importing nations of feed grains – China in particular. Cumulative US corn exports sales for Harvest 2021 are running dramatically ahead of normal with China buying earlier, and buying more than they normally would. To date, the US has already sold 14.7 mln MT of new crop corn (10.7 mln to China, 4 mln to others). This compares with 16 mln MT for the whole of last season. China bought this tonnage is the past two weeks as prices retreated from the recent highs. What remains interesting is that China’s new crop demand did nothing to slow the sell-off of grain markets globally, the focus staying with improved production potential instead.

European wheat conditions continue to improve with the arrival of much needed rains. This has again added downward pressure to new crop values with LIFFE falling £8/MT last week. The annual Kansas wheat tour is ongoing, and analysts expect a record yield potential of up to 25% higher than average in the winter wheat. After a cool start to the season, late season rains have boosted the crop outlook, but could be at the expense of reduced grain protein content. As the UK returns to a NET wheat exporter once again, it is vital that growers can deliver a high protein crop to compete with European milling wheat grades.

Have a good week.