July 17, 2012

 

European grain prices up on US, Black Sea harvests concern

 

 

As concern grew over harvests from the US and the Black Sea Basin, European grain market prices rose on Monday (July 16).

 

"The very tight global corn market will have trouble finding the same sort of substitution as last year via wheat markets because exportable stocks by the eight biggest global grain exporters have fallen sharply," experts at the Agritel information provider said.

 

The US expected a record corn harvest this year owing to a big increase in cultivated surfaces but high temperatures and dry conditions in the past few weeks have stunted the crops.

 

Similar conditions have baked the grain baskets of Ukraine and southern Russia, meanwhile, with analysts expecting Russian exports of eight million tonnes this year, compared with a previous estimate of 11 million tonnes.

 

Russia expects to harvest about 85 million tonnes of grain in 2012, far less than in 2011, while Ukrainian government sources were quoted by traders as saying they expect overall grain output of 44.0-47.0 million tonnes, down from 57 million tonnes.

 

The US Food and Agriculture Organisation forecast on July 5 that grain output worldwide would be 23 million tonnes lower this year at 2.396 billion tonnes.

 

North eastern Brazil is suffering its worst drought for 30 years, while in France, an initial harvest has been hampered by steady rains that have farmers worried about the quality of their crops.

 

In midday European grain trading, corn contracts had gained up to EUR9 (US$11.0) for delivery in August to EUR259.50 (US$319) a tonne, their highest level since September 2007 when they hit an all-time high of EUR265 (US$326).

 

Since mid-June prices have gained an average of EUR0.50 (US$0.62) a tonne. The most widely-traded contract, for delivery in November, changed hands for EUR266 (US$327), a record that surpassed one set in May 2011.

 

On the commodities market in Chicago, wheat and corn sales showed solid increases in electronic trading that precedes the markets opening.