Market Overview
Harvest 2022 has continued at rapid pace and nearing completion, with 89% of the country’s harvest now complete according to projections from AHDB analysts. The five year average for harvest progress by this point in the season is 52%. Wheat yields across the UK are varying between good and average due to the dry conditions seen in August. The UK average rainfall for the first week in August was only 7% of the long term average, recorded at 1.0mm compared to 13.4mm.
Global grain prices rose during the start of the week on the back of concerns over production potential amid drought conditions in central US States. However grain markets have come under pressure over the past 24 hours as beneficial rainfall across large parts of Europe is welcomed.
Ukrainian agricultural exports could rise to 4 million tonnes in August compared to 3 million tonnes in July according tot Denys Marchuk, deputy chair of the Ukrainian Agrarian Council. Ukraine, Turkey, Russia and the UN signed an agreement on July 22nd to resume grain exports from Ukraine Black Sea Ports. Since the first ship left Ukraine under the deal on August 1st, over 723,000 tonnes of grain has been delivered to the world market.
Continued hot and dry conditions across the EU has led to yield outlooks for 2022/2023summer crops to be cut further by the European Commission. Maize yields for the bloc are now forecast at 6.63t/ha, down 9% from July estimates. in their cereals supply and demand estimates, released at the end of July, the EC had maize production projected at 65.8 million tonnes for 2022/2023. This is based off a yield of 7.22t/ha and planted area of 9.12mha. Using the latest forecast of 6.63t/ha, EU maize production would be at 60.45 million tonnes, 5 million lower than previous projections and the lowest output since 2015.
Similar hot and dry conditions in the US are also a cause for concern, with the USDA cutting its maize crop condition scores. 55% is now rated good to excellent, down 2 percent points from last week. Uncertainty is adding support to global grain markets, acting as a price floor for other cereals such and wheat and barley.
Global oilseed prices remain volatile for the short term. Currency strength has had an impact on the market over the past few days. recent dry weather in the key US soybean states has also had an impact on price direction. Overall US soybean conditions have declined this week, losing a further percent point This has offset any potential pressure on global oilseed prices as Ukraine shipments begin to export rapeseed to the market. US weather conditions and Chinese demand will be key watch points for the long term.
