International grain markets continued their slide for much of last week, but picked up again from Thursday.
It seems like we are witnessing yet another adjustment to an overaction by markets which have seen huge change since last August and in particular since April.
This volatility is clearly shown in the fact that markets lost 50% of the gain they had achieved since September in just the past two weeks. But Chicago December maize has recovered US$34/t of that loss since Wednesday of last week.
MATIF December wheat closed last week at €209.75, which was back from €211.50 the previous week, but up from the lows of €204/t during that week. This market closed at €217/t on Tuesday.
Market sentiment was influenced by the purchase of EU wheat by China at the end of last week and further export commitments from the US.
There was also a downward revision of Brazil’s safrinha maize production by the International Grains Council (IGC). It put the Brazilian maize crop at 98.5Mt – 3.5Mt below the most recent USDA estimate. And this is still higher than the estimates of internal private forecasters.
So maize is still the major driver and there was a return to activity by speculative traders, which helped to reignite the market. There is also concern around spring wheat in the northern US plains due to continuing dry weather.
Following the impact of Chinese purchase of EU wheat, there are now rumours of further potential export sales to Saudi Arabia, according to this week’s AHDB report.
There is also concern that more rain is needed to drive Russian crop potential and production there is now forecast to be 80.9Mt, down from 85.9Mt in 2020.
The stronger grain price sentiment has spilled over into malting barley, despite the impact of COVID-19 restrictions on beer and spirit demand.
In a formula used by the IFA and Boortmalt, the stronger market has meant that €222.57/t will be the price paid for delivered in-spec malting barley this harvest.
Nearby prices remain largely unaffected by recent changes in sentiment due to the tightness in supply. Native prices remain around €250/t for wheat and €240/t for barley. Imported maize is up about €5/t again this week at €280 and €240/t ex-port for nearby and November respectively.
Native new-crop prices are also up about €5/t this week, with wheat back up around €215/t or stronger and barley either side of €205/t.