Grain prices took on a slightly stronger tone over the past week, with December ’22 MATIF wheat closing at €252.50/t last week, up from €243.75 a week earlier. Prices subsequently closed on Tuesday at €262/t and it seems like a slightly more bullish tone for the time being.
Nearby markets saw greater movement in prices last week due to a combination of the ongoing weather issues in South America and the increasingly precarious political situation around Black Sea exporters. MATIF March wheat is gone back above €290/t.
Geopolitical tensions in the Black Sea are the major influence. They are exaggerating concerns over wheat exports from Russia and maize and barley exports from Ukraine. There is also a fear that any escalation in the conflict could further lift natural gas prices, with a knock-on effect on other products such as fertiliser.
However, there is still potential for a recovery in wheat production worldwide this season, which continues to keep a lid on any potential for optimism for the time being.
The recent EU MARS report continues to express concerns about the risk of severe frost damage in areas immediately adjacent to the Black Sea.
This is not to suggest that there is a problem, but rather to indicate the high likelihood of a problem developing in the event of a severe cold snap in the near future. The mild winter to date means that crops are not sufficiently hardened off to resist heavy frost.
The report also highlighted that drought continues in parts of north Africa, specifically Morocco. This is affecting winter crops there and could lead to increased imports.
Algeria is also said to be badly in need of rain to help support crop growth there.
Wheat crop condition ratings in the US, Texas in particular, have disimproved on the previous assessment last November.
As of last weekend, 71% of the winter wheat crop was rated ‘poor’ or ‘very poor’ – up from 45% on 28 November.
Maize prices continued strong over the past week on the back of strong export sales from the US.
Meanwhile, better weather has enabled some progress in the Brazilian soya bean harvest, with yields described as ‘satisfactory’ in Mato Grosso, but lower further south.
Nearby native wheat prices are back up in the €305 to €310/t bracket, with barley running at €302 to €305/t and imported maize back up at €295/t.
New-crop prices are also slightly higher on the stronger futures market. November wheat is again on the higher side of the €245 to €250/t range, with barley at €235 to €240/t.