International grain futures markets remained relatively flat last week, but they appear to be picking up slightly again, having had a few weaker days.
It would seem that the lack of bullish news in last week’s WASDE report has not maintained a bearish tone and fears of inadequate supplies going into next harvest remain real.
Old-crop markets are best described as largely neutral over the past week or so, with nothing in the way of news to support rising prices. It is interesting to hear that discussions around increased ethanol demand in Britain have helped new-crop sentiment there.
The last AHDB report suggests that markets might slow and possibly dip this week as the Chinese new year is being celebrated, which could slow US export sales. This will always be a factor in market sentiment, given that China has been a major driver in overall demand and price response.
As we move towards spring in the northern hemisphere, there are few reports, so far, of crop difficulties or concerns that seem set to limit production in what is currently a demand-driven market.
Demand will remain a key element of the market and any news that might limit it will shape sentiment and be key for prices. The major concern currently for supply remains crop conditions in South America as those countries move through planting.
The other concern hinges on the fight for acres across North and South America. This is highly influenced by the relative futures prices for soya beans and maize, with markets trying to swing the balance in favour of each crop. This is especially the case in North America.
The other major factor is weather and its potential to affect supply. While dryness in South America remains a concern, problems with dryness can emerge at any point and in any region to affect production.
Late-spring planting, delayed growth and development and late harvesting can also exert market influences that can unfold over time.
As has been the case in recent weeks, native markets have remained quite flat and stable, especially in nearby positions for old-crop, which is now scarce. Nearby wheat remains around €240/t, while barley is still closer to €210/t.
New-crop prices continue to be more volatile, as opinions and drivers of production affect sentiment and prices.
However, they have increased again this week to where they were a few weeks ago, with November barley generally at €188 to €190/t, depending on the day, and wheat generally either side of €200/t, also depending on the day.