International grain markets continued upwards last week, but they weakened a bit again on Tuesday of this week.
Last Friday, MATIF December wheat closed at €264.25/t, up €11/t on the previous week and up €27/t on four weeks earlier. That contract closed at €265.25 last Monday, but eased back to €262.75/t on Tuesday.
One of the key drivers of that recent rally, especially in wheat, was the USDA announcement in its September quarterly grain report last Thursday that its wheat stocks are forecast to hit a 14-year low. This was mainly due to reduced production.
Its forecasted stocks of 48.4Mt was below what had been anticipated and it sent the market into yet another tizzy for a period, as funds rushed in to drive the market.
It is also of interest to note that the European Commission, on the same day, raised its common wheat production figure by 3.8Mt (to 131.0Mt) compared with the previous month.
While this might have weakened price sentiment, MATIF futures strengthened pretty much in line with Chicago.
Strong global demand in physical markets for nearby positions, coupled with a weaker euro against the dollar, also helped to support prices.
Now the big question is whether higher prices will drive an area increase or will higher costs lead to lower production area for the coming season.
Maize prices increased alongside wheat, but to a lesser extent. That same USDA report put maize stocks at 31.4Mt, higher than had been anticipated by the market.
As well as that, maize prices are being limited by US harvest pressure. A recent AHDB report stated that maize harvesting in the US was 29% complete on 3 October versus about 22% on a five-year average.
In contrast, progress in the French maize harvest has been very slow, with only an estimated 2% harvested by 27 September compared with 31% at the same time last year.
Meanwhile, Brazil is currently planting its full-season maize crop, which is now smaller than Safrinha. Current estimates suggest that this could be between 30Mt and 32Mt.
Native prices are up again this week. Nearby wheat has moved to €260/t (higher at times) and barley to €250-€255/t, with those applicable to year end. November ’22 prices are now around €225/t for wheat and €215/t for barley.
Meanwhile, for those who still have rape to sell, the MATIF November price closed on Tuesday at €662/t, up €18/t since last Friday and up €42.50/t since last Friday week.