Last week was a dramatic one for international grain prices, with MATIF December wheat rising by €20/t between Wednesday and Friday morning, but it is since back €15/t off that peak due to profit taking by fund investors.
The price rise came on the back of the World Agricultural Supply and Demand Estimates (WASDE) report from the USDA, which forecast lower wheat and somewhat lower maize production on top of lower stock estimates.
The WASDE report significantly affected on futures prices for 2021 and 2022.
However, the gains were much bigger for wheat than for maize in the US, while in Europe MATIF December wheat futures saw even greater gains than the US to close last Friday at €254.25/t – a new contract high closing position but it had been up at €257/t at midday on Friday.
On Tuesday of this week that contract closed at €242.75/t but it seems to be rising again.
The report indicated a 15.5Mt cut to global wheat production in exporting countries.
Wheat production was decreased by 12.5Mt in Russia, 7.5Mt in Canada and 1.3Mt in the US.
The report also indicated an uplift in demand, which, together with the cuts in production in some major exporters, reduced the stocks to use ration by 12.7%.
This is even lower than it was in the 2007/08 season, when prices were very high.
There are also concerns over wheat quality in the EU and in France in particular.
While the EU will have a bigger wheat harvest in 2021, the question is whether that will be quality or quantity?
The current AHDB report states that only 35% of the wheat crop delivered to the Soufflet Group had reached the milling wheat standard of 76KPH.
Other reports suggest that specific weights are also an issue in Germany, as are Hagberg Falling Numbers. But so far sprouting is said not to be a major issue in France.
The WASDE report also cut US maize production by 10.5Mt but it increased total global production by 2.6Mt.
Just as a rising tide lifts all boats, so too has this market trend influenced prices here. Wheat prices are up around €10/t on last week at €250/t for nearby and €245/t for November.
Barley is up a similar amount with nearby at €225 to €230/t and November price floating either side of €230/t.