Higher wheat prices due to lower grain production in April

The International Grains Council (IGC) estimates in the April forecast that global grain production will be 5 million tons lower compared to the previous month, resulting in 2,218 million tons of grain for the new 2020-21 season.

This means that production is still 43 million tons higher than a year earlier. Record production is expected for both wheat and corn. Worldwide grain consumption is also expected to increase sharply in 2020 -21 to a new record of 2,222 million tons (2019 -20 consumption: 2,181 million tons).

Higher wheat price

Lower yields are expected due to unfavourable weather conditions for crops in Europe and the Black Sea Region. Due to the drought there is less wheat growth and last autumn less winter wheat was sown due to the heavy rainfall.

The quotations for milling wheat are rising sharply on the futures market in Paris due to the not ideal position of the crops. In addition, the May contract is about to expire, which also supported this listing. For milling wheat, the May contract price for May 5 was € 199.75 per ton. This brings the quotation close to € 200 per ton. Sales of French wheat outside the EU are running smoothly, supporting the wheat price.

Less demand for corn

For this current 2019-20 season, world grain production has increased by 1 million tons to 2,176 million tons. The decline in corn production is offset by higher harvests of wheat and barley. The Covid-19 pandemic has negatively impacted demand. Cereal consumption has fallen sharply compared to the previous forecast, by 11 million tons. Partly due to the sharp decline for industrial use, much less corn is processed into ethanol, because the demand for fuels has plummeted.

This week the forecast is: Upward price pressure for wheat.