El Nino Brings High Risk, Potential Upside for Global Grain Markets
El Nino's impact on global grain markets is expected to be significant, according to analysts at the International Grains Council (IGC). The IGC briefing on September 25 identified a 90% chance that El Nino will have a 'very strong' impact this year, with its peak effect anticipated in November.
Tighter supplies could support better prices in the months ahead, but geopolitical uncertainty is currently holding sway over market sentiment. Chicago wheat futures continued to fall following the report, despite declining availability putting upward pressure on prices. Nearby Chicago wheat futures dropped from £199.34/t to £190.79/t between September 21 and 28.
The IGC reported a 3% year-on-year decline in global wheat production at 819m tonnes, with seven of the eight main wheat-producing countries experiencing smaller crops due to dry weather and changes in crop rotations towards more profitable oilseeds.