Volatility continues in futures markets, but generally within the tighter range of recent weeks.
The December MATIF contract closed at €328.50 last Friday compared with €326.25 the previous Friday, but weakened to close at €322.50/t on Tuesday.
Markets remain very uncertain. It continues to move on weather forecasts and market reports. And the fact that grain shipments from Ukraine continue to move uninterrupted is tending to keep a cap on upward price movement, which is driven mainly by hot dry conditions in the US and Europe.
The tone from WASDE
Markets are always influenced by the World Agricultural Supply and Demand Estimates (WASDE) from the USDA.
Last Friday’s report revised global wheat output upwards by 7.96Mt for 2022/23 to 779.60Mt. Additional production is expected from Russia, Australia and China. However, global ending stocks are estimated to be slightly lower due to increased consumption.
The WASDE report indicates slightly lower maize production at 1,179.61Mt (down just over 6Mt). This is mainly driven by anticipated reductions in US and EU output and China could add further to these reductions due to the dry conditions prevailing there. Global stocks are estimated to be lower as a consequence.
Other market drivers
Crop condition scores in the US were lowered for maize and spring wheat in last week’s crop conditions report due to the hot dry weather.
And those conditions continued through last week, so markets will watch this closely.
There are similar concerns for maize crops in Europe. Crop condition scores in France suggest only 53% of maize was in good-excellent condition on 8 August, down from 62% a week earlier, according to FranceAgriMer.
There are also serious concerns over maize production in Romania and Hungary due to heat and dryness. Last week, Stratégie Grains reduced its EU maize output forecast to 55.4Mt, down 10Mt since July.
The last AHDB report suggests that 12 ships have now left Ukrainian ports carrying grains through the ‘grain corridor’. The first shipment of wheat came through Istanbul on Sunday last.
Native physical prices remain within the same price band as in recent weeks. Dry wheat for November is in the €345-€350/t range to the trade, while barley is in the €330 to €335/t bracket. Imported maize ex-port remains around €335/t.
Nearby or spot positions are more difficult, as they generally involve a forced purchase or sale. Spot wheat is trading from €340 to €355/t, depending on the day, with barley from €325 to €335/t.