Price sentiment in grain futures weakened over the past week, especially this week.
Having dropped from a close-of-business high of €414/t around mid-May, December MATIF futures closed last Friday at €384.75/t and at €365.50/t on Tuesday last.
While there is still significant optimism for wheat prices, sentiment is certainly weaker than it was a month ago.
The situation with maize is somewhat similar and November MATIF futures had a week-closing high of €364.50/t in mid-May, which dropped to €322/t last Tuesday.
Closing prices only tell part of the story, as Tuesday’s close is down nearly €30/t on the previous Thursday’s highs. This makes both sentiment and actual prices impossible to pin down.
The most recent price weakening is partly a consequence of weaker external markets driven by sell-off as markets adjust to demand rationing.
The Ukraine conflict continues to affect market sentiment, with continuous efforts being made to ramp up movement of grain stocks out of the country ahead of harvest.
In Europe, production estimates for the EU have again been reduced following the ongoing impact of heat and drought in different regions.
Yields for wheat and winter barley are now pegged at below five-year average levels. In countries such as Spain, where drier than usual conditions have been exacerbated by hotter weather, the impact is expected to be greater.
While big parts of France were also affected by dryness and extreme heat, early harvest indications are better than expected, with very high quality. Given the tight global supply picture on wheat, production in Europe will be watched closely in the weeks ahead.
US maize markets saw less weakening overall in recent weeks due to dry weather across the US Midwest causing concerns for crop yields.
The market is virtually impossible to report due to high volatility. It is not uncommon to see more than €10/t daily price shifts and this makes pricing difficult.
For now, it seems that prices are weakening, even though overall supply is trending downwards if anything.
Spot prices are now almost entirely linked to imported prices, leaving nearby wheat running either side of €400/t and barley between €390 and €400/t. But there is huge daily volatility on these prices.
On new crop, there is very little actual trading, so prices are mainly indicative. November wheat seems to be either side of €370/t, but mainly on the higher side, while barley is generally about €15/t under wheat.