A week of falling grain prices saw MATIF wheat price drop €15.50/t below its closing price of €229.75 last Friday week.
It closed last week at €217.75/t and continued to weaken in the early days of this week.
That said, Chicago wheat and maize prices appear to be levelling off again, despite slight falls midweek.
Markets might be described as tired following weeks of spiking prices, so a change of sentiment was inevitable at some point.
Now we may have to endure a period of weaker sentiment, despite serious concerns over the potential of the Brazilian safrinha maize harvest on the one hand and an increasing likelihood that the US maize area will be a few million acres higher than was previously estimated on the other.
While there is real concern over the potential of the Brazilian safrinha crop, reports from there suggest that it has continued to develop well, despite the dryness.
Last week, the United States Department of Agriculture (USDA) produced its world agricultural supply and demand estimates (WASDE), which gave its first official view of new-crop (2021/22) supply and demand prospects.
It predicted that both supply and use of maize are likely to hit record levels in 2021/22.
The report decreased its estimate of the Brazilian crop size by around 7Mt but, it still indicated that global stocks-to-use for maize is likely to increase slightly.
This prompted a change in sentiment on new-crop maize, which has been the market driver, and precipitated a run of price decreases over the past week.
The WASDE outlook for wheat indicated that global stocks-to-use ratio is likely to tighten, despite its higher production outlook.
However, there are mixed views as to its prediction for Russian wheat production, which some deem to be too strong for the moment.
Closer to home
This change in overall sentiment had a significant impact on prices closer to home, especially on new-crop and further out into the future.
While buyers had little interest in buying at the high price levels of recent weeks, it seems that they may have even less interest now, believing that prices look set to fall further from the current levels.
This lack of a real market makes prices more hearsay than real, but that’s the market. Nearby wheat remains broadly similar at €250/t, but barley has moved to the strong side of €230/t, as it represents good value in the current market.
New-crop wheat is back to between €220 to €225/t, while barley is either side of €212/t.