There was a further weakening in futures markets over the past week. This has happened across all cereal types and in all markets.

It is a saying in the market that “bulls need feeding”. In this case, the “bull” is the strong sentiment that had been present which drove prices upwards. And the “feeding” refers to news that supports the bullish sentiment, such as crops in poor condition or planting prevented by weather.

In the past few weeks, there has been little news that strongly supports prices. And now that crops in the northern hemisphere are largely dormant, there is unlikely to be much on the production side to support prices in the coming weeks, unless there is a significant change in the supply or demand numbers.

But markets may well be influenced by politics and trade issues or sentiment over the coming months.

Foreign pressures

The major downward driver of prices continues to be the better global supply prospects for wheat, coupled with rain in South America, which benefited maize. Profit-taking by investors was also a significant factor. On the supply side, news of the increase in Australia’s wheat crop (+2.3mt), confirmation that Canada’s wheat crop was the largest in seven years and Russia’s willingness to increase its proposed export quota post-February all act to weaken price sentiment.

These three countries alone add to the supply of wheat this year, but there are also concerns about supply for 2021-22. However, large stocks will still cushion any impact from that, unless a production hit is quite significant.

Price pressure is mainly on wheat and the drop in maize price was lower. This is because global maize demand is already expected to exceed supply.

And while recent rain was welcomed in South America, it will not be enough to support Brazil’s safrinha maize crop, which will not be planted until after the soya bean crop there is harvested.

Native prices

While the fall in futures prices has been substantial, the fall in physical prices has been less than half that. Here in Ireland, physical prices seem to be only back a few euro at most. Nearby prices now are mainly new year positions and wheat has slipped below €220/t.

But the price level very much depends on the contract date and it could still reach €222 or €223/t for May or June.

Barley has weakened also, with nearby contracts now in the region of €187 to €190/t, with €193 possible for next May.

Wheat for next November is put at €192/t, with barley back to around €180 to €182/t.