The past week has seen dramatic weakening in the futures market, mainly as a result of new fears emerging around COVID-19.

Prices for MATIF positions out to December 2023 all weakened.

December ’21 contracts closed last Friday at €299.25, having been as high as €313/t in the previous days. By Monday of this week, it closed at €287/t and this was down to €279.50/t at Tuesday’s close.

The situation was broadly similar for December ’22 positions, which closed at €254.50 on Tuesday.

It seems that increasing worries over the most recent escalation of COVID-19 is adding to market uncertainty. This is again giving rise to demand concerns that are impacting on sentiment.

Wheat remains tight

Markets are still mainly tight, but perhaps it is important to realise that the price levels are still high by traditional levels.

Supply of wheat (for milling) remains tight, while demand remains strong. EU exports continue at a stronger than anticipated pace and the Commission is forecasting that the EU27 will export 32.0Mt during 2021/22 – 4.6Mt more than in the previous season.

This is set to result in lower closing stocks, which are driving markets, and with the Russian export tax set to rise again this week, it looks like supply pressures will continue. That said, any political decision could impact significantly on market sentiment.

Australia and Argentina

The Australian harvest continues to be a cause for concern due to the La Niña weather event in progress there. Harvesting continues to be disrupted by rainfall.

Some believe Australia still has a lot of milling wheat in stock, which could not be exported last year.

Argentina is the other wildcard currently. It seems that wheat yields there have been improving as the harvest progresses and this could still help to ease the global supply situation.

Native prices

Native physical prices have eased back somewhat due to the most recent direction of futures markets.

However, physical markets are based on something more tangible, so that shows less volatility overall – slower to rise and slower to fall.

For those with grain still in store, nearby wheat is now around €300-€305/t and barley is €295-€300/t.

Looking to new crop, wheat offers are around €245/t and barley €235/t. November ’22 MATIF oilseed rape was back at €530/t on Tuesday from €580/t in recent weeks.