Global grain markets met with another day of unpredictable excitement on Tuesday when yet another World Agricultural Supply and Demand Estimate (WASDE) report showed lower production numbers combined with higher consumption to reduce global carryover stocks by 2.5mt compared with last month.
This resulted in further significant increases in all product markets on Tuesday evening, which make physical prices uncertain for a period.
Global production of wheat is down about 1mt on December and consumption is up 1mt, leaving global closing stocks down over 2.5mt.
The reports puts total coarse grain production down just over 1mt, total use is 0.8mt lower and ending stocks are also down 0.8mt.
While much of the detail was expected, markets responded significantly to the report. But the reduction in average US maize yield was a surprise and it became a driver for price increases in maize.
Also, the decision to suspend exports of maize from Argentina until the end of February was reversed and replaced by a temporary 30,000t daily cap on export sales. This was a result of farmers refusing to sell their crops into the home market.
On wheat, the announcement of increased domestic levies on exports from Russia added some strength to that market. But wheat and barley are also benefiting from the continuing rise in maize and soya prices. Both soya bean and soya meal prices have seen continuous gains in the past week, increasing from $13.594/bushel to $14.382/bu (€431/t) and $438.9 to $474.1/US ton (€425.72/t) respectively.
While the market is generally stronger, prices are difficult to gauge. Buyers are unwilling to buy in a spike and owners are unwilling to sell in the hope of higher prices tomorrow.
While sudden price spikes seldom last for more than a few days, sentiment is now stronger on the back of weaker supply and stronger demand.
Price levels are closer to guesswork this week. Nearby wheat is likely to be above €230/t, or even higher if someone really needs it now. Nearby barley was easily making €200/t at the start of this week, but this may have increased by €2 to €4/t by midweek.
Imported maize is now up to €235/t ex-port and you might not be able to buy soya bean meal for €550/t if you need it.
November prices are less driven by the current pressures, but they too are somewhat stronger. Wheat is now €200+/t, but buyers are generally not that interested. November barley is probably pushing closer to €190/t. The recent malting barley price offer is €200/t green.