Futures prices eased slightly last week, but markets continue to be supported by the fact that there seem to be more buyers than sellers in international markets. There is little to support a continuing increase in prices, but there are still some causes for concern.

Currency was a factor last week, as a strengthening US dollar forced internal US prices down to remain competitive on export markets.

MATIF prices fell also, with December wheat closing at €192.25/t last week, down from €194.50/t the previous Friday. However, this seems to be picking up again at the time of going to press on Wednesday.

The Agriculture and Horticulture Development Board (AHDB) reported that Russian wheat export prices fell slightly last week and this acted to curb the ongoing increase. And this happened when the rouble was near to a six-month low against the dollar.

It is also significant that internal Russian prices continued to rally due to strong demand and the reluctance of Russian farmers to sell.

Interestingly, with dryness now affecting planting in central Europe, and Russian internal prices continuing to strengthen, the AHDB reports that the Russian agriculture ministry will make a decision this month about imposing a quota on exports during the first half of 2021. This has the potential to further drive wheat prices, depending on the level of constraint imposed.

Dryness concerns

Dryness has become an increasing concern in the market. Much of the winter wheat planting in Ukraine is being delayed because of a severe drought. This could affect plantings and crop choice to decrease 2021 production.

With the northern hemisphere wheat harvest now virtually wrapped up (excluding maize), issues in the southern hemisphere continue to cause concern on maize. High temperatures and dryness continue to affect key maize producers such as Brazil and Argentina and there are questions concerning the suitability of planting conditions for 2021.

Meanwhile, the International Grains Council again reduced global grain production by 3mt on last month’s estimate. Maize production was lowered by 6mt to leave a net draw-down of stocks of 16mt.

Native prices

Native grain prices remain similar this week, with growers offered up to €205/t for dry wheat recently. With mills now covered to the new year, prices are influenced by contract date. Wheat ranges from €198/t out to €205/t for December. May wheat is around €208-€210/t but it might be difficult to get a buyer. Barley sales are either side of €180/t with collection and payment date factors.