Maize prices now driving the global grain market
Maize prices are set to influence grain markets, with global stocks at their lowest since 2020. Despite a smaller crop, US exports have risen, supported by high ethanol production. However, trade tensions with China and weather concerns in Argentina add uncertainty. Speculators are betting on rising prices, impacting UK feed wheat futures, with strong correlations to Paris maize futures.
Agricultural and Horticultural Development Board (AHDB) analysts are confirming the potential for maize prices to determine grain market trends over the coming weeks.
In essence, the global balance of maize this season is relatively tight, with global ending stocks of maize in 2024/2025 at the lowest since 2020/2021 and the second lowest since 2014/2015.
Maize ending stocks held by major exporters US, Brazil, Argentina and Ukraine are forecast 13% lower on the year, and down 4.5% on the five-year average.
Despite a smaller crop, US maize exports this season to date, are higher than the previous year and the five-year average.
Ethanol production in the US is at a high level and this has also supported US prices. However, it’s worth noting that current shipments to China have been minimal, and a potential trade war between the US and China would impact the market.
In addition, maize exports from Brazil in December 2024 were 30% lower year-on-year. While this adds bearish sentiment, limited supplies underpin the market.
From early December, US maize futures have added support to the wider grains complex.
According to AHDB analysts, high demand for maize on the physical market, with limited supply is driving this gain.
Fundamentally, maize prices could find some points of support. From December 2024 until now, there has been a trend towards rising maize prices, especially in the US.
Maize prices
Hot and dry weather in Argentina is also on the radar, as it could reduce the global export supply of maize.
The United States Department of Agriculture’s (USDA’s) next World Agricultural Supply and Demand Estimates will be published today (Friday, January 10).
The average trade estimate for world ending stocks of maize is 294.8 Mt, 1.6 Mt lower than in the previous report.
If a greater or smaller revision than this becomes evident, there could well be see some market reaction.
Speculators increased their net long positions for Chicago maize in the week ending December 31.
On the one hand, this means that speculators are hoping for the further gains in maize prices, but on the other hand, if the trend turns bearish, covering long positions could accelerate the decline.
Meanwhile, international maize price movements continue to impact UK feed wheat futures this season.
This trend has been apparent since the end of last summer
Correlation analysis for the months of July to October 2024, confirmed by AHDB, shows that UK feed wheat price movements are highly correlated with Paris milling wheat futures.
However, in August and October 2024 there was a very high correlation between Paris maize and UK feed wheat.
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Source : Agriland
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