The past week saw a significant acceleration in the pace of grain price increases. Last week was very active on futures screens and things had been even more active early this week.

A few weeks ago, MATIF December wheat hovered between €196 and €200/t. Last Friday, it closed at €218.25/t, up from €206/t the previous week.

Last Tuesday it closed at €226/t, having been above €230/t at one point during the day.

Chicago told a similar story. Last Thursday (22 April), Chicago December wheat opened at $6.804/bushel and on Tuesday of this week it climbed to $7.672/bu before easing back slightly. That easing back continued into Wednesday.

Supply and demand

The recent market activity seems to hinge around three main factors – Brazil, China and weather.

While they are all uncertain, the combined impact of these three is that the predicted supply of grain for 2021/22 is smaller than the anticipated demand and this is driving maize prices in particular.

Markets had been moving at a pace, but they seemed to have accelerated last Thursday.

It is suggested that Chinese purchases of maize and EU wheat were a significant factor in this latest price drive.

It seems that the market is taking these purchases as confirmation that demand from China will continue to grow in the coming year.

Brazil’s Safrinha maize crop remains critical to the supply chain. Much of that crop was planted late and conditions remain very dry. But it is not that hot and this is leaving the impact on yield uncertain.

Official estimates put that crop at 109Mt, but others consider this to be 18Mt too high. Lower production means less maize to export.

While weather is a factor in Brazil and parts of the northern hemisphere, most crops are not yet subject to any serious weather threats. However, this could still happen and it is adding to the general nervousness in the market.

Native markets

It is hardly surprising that markets here have moved with the recent price surges.

Old-crop wheat has recovered to again be in the €245 to €250/t range, while barley is now around €220 to €225/t. Imported maize has surged to €275/t ex-port.

New-crop wheat has moved up into the €225 to €230/t range, depending on the hour, and barley is in the €210 to €212/t bracket. These price levels continue to present forward selling opportunities.

November maize has climbed to €245/t ex-port and current trends suggest that this could be over €260/t by year-end.