Global grain prices continue to strengthen as physical and futures markets take another lift.

On Tuesday night, MATIF December wheat closed at €200/t for the first time since those contracts opened.

It is also the first time that any MATIF wheat position got up to this level since 2018. So markets, especially nearby markets, are carrying a strong sentiment.

Maize prices are following suit. MATIF November wheat closed on Tuesday at €173.25/t, its first time to get above €173 since last January. Chicago December maize got up to $3.89/bushel on Tuesday, its first time to be up at that price level since last February.

The fact that wheat and maize are rising in unison seems to support current sentiment, but global grain is still likely to be in surplus. However, the size of that surplus seems to be shrinking over time.

The drivers

Estimates of Russian grain production were increased again last week to a new total of 125mt, of which 82mt is wheat. This news would normally knock the market back but not this time. Other news from the US dominated recent sentiment.

A recent USDA report lowered US wheat production estimates and its Grain Stocks report now shows wheat stocks below last year’s level and the five-year average. On top of this, the impact of La Niña is continuing, with dryness raising concerns for the outcome of its 2021 winter wheat crop.

That report also lowered its maize supply by about 260 million bushels (just over 6.6mt) from the September estimate. The maize crop there is now maturing ahead of normal and harvest is progressing well.

These reports in the US led to a further rally in global wheat prices in the past week. However, it still seems likely that this will be a more short- than long-term reaction.

Native prices

There is a firmer tone to markets this week, especially wheat. Spot wheat prices are now up in the €200 to €205/t range, depending on location and the payment point.

However, note that May MATIF futures are €3/t lower than on Wednesday, so we must wonder if what we are seeing is really a spot ‘bull’ market or if the price rise will continue. And MATIF September 2021 wheat is €11/t below its December 2020 price.

Barley prices remain under more pressure because there are more sellers and price continues to float either side of €180/t, with up to €185/t possible. Some merchants have now set their green barley price at €150/t.

Higher imported maize prices are helping, with spot up to €200/t and November at €195/t ex-port.