Grain markets have been bouncing around for the past week, with MATIF wheat for December ’22 closing last week at €247/t. It picked up a bit again on Monday and closed at €250.50/t on Tuesday night, as new-crop positions gained more than old crop.
Weather concerns are impacting again, with wheat crop condition ratings in the US weakening due to dryness and other factors.
For the past few months, the longer-term prospects for wheat were weakened by the prospect of increasing carryover stocks, but the sentiment appears to be turning once again.
The absence of a reasonable price premium for milling wheat could well reduce nitrogen usage, which could hit grain protein levels and cause concerns for milling quality availability.
Chicago wheat had been falling since before Christmas, largely in response to bumper harvests in Australia and Argentina, but it turned upwards again last weekend. This was the case for both nearby and for new-crop positions.
Slower than anticipated US wheat exports were also weighing on the market there.
US maize held somewhat stronger over the same period, remaining largely flat or actually increasing in response to ongoing production concerns from South America.
Markets have been trading on bits of news for the past few weeks and they now await the next USDA world agricultural supply and demand estimates (WASDE) to be published this Wednesday.
However, markets have already traded the speculation that overall 2022 production may be less bullish than had originally been forecast.
With the 2020/21 global wheat harvest now virtually complete, confirmation of those numbers will influence market sentiment based on the winter plantings already in the ground.
This will influence the market for the next few months, but once growth gets under way in springtime, weather seems set to be a potentially big factor once again as carryover stock levels are not as big as in some previous years.
Native prices remain broadly similar to last week, with nearby wheat still around €300/t to €305/t and €297 to €300/t for barley.
November prices remain as they were – either side of €245/t for wheat and either side of €235/t for barley.
MATIF oilseed rape for February passed €800/t on Tuesday, but it closed at €793/t, while the November contract closed at €580.75/t on Tuesday.