Having reported on the upturn in grain prices last week, they have been down and back up again many times in the past week. While the tightness in supply is now generally accepted, fears on the demand side remain a big uncertainty.

Economic recession is a significant factor in this. All other inflationary factors play a part too, as a cost of living increase may force consumers to decrease livestock product consumption.

Futures reacting

While physical prices differ from futures, they are still affected by the sentiment. On Wednesday of last week, MATIF December wheat closed at €337.25/t.

This dropped to €332.25 on Thursday and closed at €333.75 on Friday. On Monday of this week, it dropped again to 325.75/t, but by Tuesday it was back up to €339.25/t. So volatility is alive and well.

It is also interesting to look forward to December 2023 prices. On Wednesday of last week, this contract closed at €319.50/t and fell to €308.75/t at Monday’s close. On Tuesday, this increased to €318/t.

It is interesting to note that prior to the WASDE report last week, wheat was trading in a band between €315 and €325/t. Since then it has been more in a €325 to €339/t band.

Meanwhile, Chicago maize for December saw a slight weakening over the same time span, but it too picked up again on Tuesday. Chicago maize prices remain in the upper half of the levels created by the war in Ukraine.

Price pressures

Maize production estimates in Europe have been lowered again and the Commission now indicates that 2022 production will be 19% below the five-year average.

Concerns over demand continue to be a significant pressure point in market sentiment. In the past we have seen supply scarcity turn into surplus due to demand trimming.

Increased interest rates, to help tackle inflation, also sparked an amount of the recent selling over fears of slowing global economic growth.

Yet another increase in wheat production forecast in Russia, up 2Mt to 99Mt, added pressure on wheat markets early this week, but this was reversed on Tuesday.

Native prices

Prices remain difficult with such volatility about, but they remain broadly similar to last week.

November wheat is trading up to €350/t, with barley around €335 to €340/t, depending on the day.

Oilseed rape futures prices continue to weaken, with MATIF for November 2023 closing on Tuesday at €594/t, up on previous days. The November 2022 price is now back to €574.75t.