London, April 2011

The past month was again volatile in global markets, with a sharp jump in grain values in early April largely centred on renewed bullish trading in maize (corn), partly in response to new US data indicating heavier than anticipated domestic use.

However, there was also general nervousness about world weather conditions for upcoming northern hemisphere harvests, while developments in other commodities, energy markets and global economic news played a role too. Day-to-day volatility in futures exchanges remained very high, with the average “historical volatility” percentage (HV20) for nearby US CME corn in Chicago showing a further increase since March. International wheat prices registered net gains of some $30 per ton, reflecting a generally tight market for milling wheat, especially premium varieties, with concerns about the impact of dry conditions on the next US Hard Red Winter crop and overly wet weather on spring wheat plantings.

There were also uncertainties about the future relaxation of export controls in the Black Sea region. US nearby maize futures climbed to all-time highs in early April, when the latest quarterly stocks data, indicating much higher than anticipated use, eclipsed the slightly bearish US planting forecast, reigniting worries about the likely low level of pipeline stocks.

Heavy US export sales activity and continued speculation about purchases by China added further to the bullish market sentiment. In contrast, prices of oilseeds showed little net change in the past month, with new-crop soyabeans from South America beginning to enter the market, offsetting concerns about the tighter supply outlook in the US. Global rice prices actually moved lower in the face of improved supplies from recent Asian exporter crops.

Despite strong global demand for commodities and raw materials, and rising bunker fuel prices, dry bulk ocean freight rates fell significantly due to a continuing build-up of surplus tonnage.

For main market events since 24 March see: www.igc.int/gmr/410/marketevents.pdf

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