Global trade turmoil weighs on grain and oilseed prices

Absa AgriBusiness examines global and local dynamics on the grain and oilseed markets during late October and early November, and provides price trend forecasts for the coming months.

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While the Food and Agriculture Organization of the United Nations’ Food Price Index stayed relatively stable in October, global grain and oilseed prices rose on the back of higher wheat and maize prices. The increases in the latter were supported by uncertainty about the Black Sea Grain Initiative, as well as expectations of reduced production in the Northern Hemisphere.

MAIZE

The Chicago Board of Trade’s (CBOT) maize price continued on its downward trajectory in early November, falling 0,3% month-on-month (see Graph 1). This was the result of pressure from a stronger US dollar, concerns about the state of the global economy, and the impressive progress made with the US harvest.

In Argentina, drought conditions are weighing on maize production, as a smaller area than usual has been planted to the grain. Poor early-season rainfall forecasts are discouraging early-season planting, which makes up around 40% of the total area planted to maize in that country. This is expected to weaken Southern Hemisphere production over the coming season, and presents upside price risks.

In South Africa, maize planting for the 2022/23 season is well under way, with positive production sentiments on the market on the back of good soil moisture and rainfall at the end of October.