International grain prices continue to rise in line with virtually all other feedstuffs, driven primarily by high demand from southeast Asia.

That is primarily for soya beans and maize, but the demand for these products is tightening the supply situation for feeds across the world.

While physical prices are rising on the back of this demand, there is real uncertainty as to whether this is a short-term phenomenon or if it will last through the marketing year.

There has been no major change in the overall supply situation, but consumption may be higher than had been anticipated.

Strong demand

While production in Russia was negative on market sentiment in recent months, it now seems that the high production is being exported at a record rate, emphasising the general demand trend.

This strong demand saw futures prices rise last week, with MATIF December wheat showing one if its biggest weekly increases for some time. This contract closed last week at €194.50/t, compared with €188.50/t the previous week.

Physical prices move more slowly, but they are generally on the up as buyers try to secure supplies for export.

Imported maize is up €10/t (€195/t ex-port) on the back of this demand, while soya has risen from €340/t at the end of August to €385/t this week.

This is pulling up the whole oilseed complex and dry oilseed rape here has pushed up above €385/t for supply in early 2021.

Southern hemisphere

While demand appears stronger than expected, supply from the northern hemisphere is now fixed and an oversupply situation is still expected.

This limits how far prices can rise, while increasing the focus on southern hemisphere production. The anticipated La Niña weather event will limit further growth from those regions and could even decrease current forecasts.

Already, dryness is a concern for developing wheat crops in Argentina. And dryness has become a concern in the Black Sea region where planting is being delayed, but with unknown consequences as of now.

Native prices

Prices here are stronger again this week, but they show a bigger spread as nearby positions become covered by buyers.

Feed wheat can vary from €198/t for nearby positions out to €203/t for early in the new year. Barley is following a similar spread, with the equivalent figures ranging from €178 to €182/t. A number of buyers are now paying €150/t for green barley at 20% moisture and this might even strengthen slightly if the stronger market sentiment continues.