Wheat prices on the Euronext exchange rose 2.8% w-o-w to €182.5/MT in the week of 17th August on the back of projected low domestic supply due to dry conditions across Europe. According to the USDA, EU wheat production is estimated to fall by 12.5% in 2020/21, to 135.5 million tonnes. However, on average, global wheat prices are lower in August compared to the previous month as increasing expectations for ample Russian wheat yield are helping to pressure the market. As of 20th August, Euronext wheat price was €181.3/MT and CBOT wheat price was $194.2/MT, down 2% and 1.2% m-o-m respectively. Strong competition with Black Sea wheat is likely to add further downward pressure to US wheat prices in the near term.
A severe storm damaged maize (corn) crops in the US state of Iowa, causing maize prices on the Chicago Board of Trade (CBOT) to rise to the highest level in more than a month, at $135.6/MT on 17th August. The state is expected to account for 18% of the US total maize production and as a result, the increase in price was reflected on other major maize suppliers’ prices.
As of 20th August, maize price on the Euronext exchange was €166/MT, up 2.5% m-o-m. Meanwhile, in South America, Brazilian maize prices sharply rose by 16.9% to BRL 0.97/kg in the three weeks to 19th August. Despite fast pace harvesting of the second crop ‘safrinha’, domestic supply is reported low as farmers are holding on to supplies, prioritising the deliveries already scheduled and postponing new ones on expectations prices will rise further. However, bearish global maize prices are likely in the short-to-medium term, pressured by projected ample supply in 2020/21. According to the USDA, global maize production is forecast to reach a record 1.17 billion tonnes in 2020/21, up 5.3% compared to 2019/20.
Tight rice availability projected in 2019/20 for most rice exporters continues to support global rice prices. Thai output has been impacted by intensive drought, making exports less competitive in comparison to other major rice suppliers. As a result, Thailand is expected to be overtaken as the second-largest exporter by Vietnam. Meanwhile, escalating COVID-19 cases in India – the world’s largest rice exporter – heightened concerns among key rice importers related to export curbs. These concerns have helped support firmer prices, with Thai rice rising by 3.3% to $466/MT in the three weeks to 5th August and Indian rice up 1.3% m-o-m to $385/MT on 12th August. This bullish trend is likely to persist in the short term, under strong demand fundamentals and potential supply disruption.