International grain markets continued to strengthen last week. The French December MATIF wheat futures closed the week last Friday at €232.25/t, up from €225.50/t a week earlier.
It floated around this value in the early days of this week, but then took another step upwards on Tuesday to close at €237.75/t. However, only time will tell if that increase continues or slips back again.
Markets continue to be nervous and weather continues to impact on sentiment. At this point, the market seems to have taken up a seesaw position between wheat and maize.
Some weeks ago, the forecasters had concerns about insufficient maize supply and they thought they were dealing with a surplus of wheat.
Now, the fears seem to be around overall wheat supply, as dryness limits wheat production and the prospects for maize appear to have moved up a gear.
Wheat production continues to be influenced by dryness issues in the US and Canada. Production potential has been significantly reduced in these countries which are big exporters of quality milling wheat.
There are also significant concerns again in Russia. Production there was initially limited by winter dryness, but this was then increased in early summer.
However, it began to fall again a few weeks ago and analyst SoveEcon recently reduced its Russian wheat production estimate by 5.9Mt to 76.4Mt. This level of production could well limit export potential.
The last AHDB report states that harvesting has already begun in Canada as the continuing heat forces crops to mature. It states that over half the wheat is now ready to be harvested in Saskatchewan.
Rain and wet have continued to cause harvesting delays in France and these are impacting on supply here. The AHDB report states that 66% of soft wheat had been harvested up to 2 August, down from 97% at the same time last year.
Markets now look towards Thursday’s USDA world supply and demand estimates (WASDE) to provide further direction for global grain prices.
Native prices stronger
The rise in futures markets is being reflected in physical prices here also. Nearby wheat is holding at €240/t at a time when it would normally be dropping due to harvest pressure. The lack of imports is helping early new-crop prices.
Nearby barley price depends a bit on location and demand, but it is generally holding at or close to €220/t.
November prices are stronger this week, with wheat around €235/t and barley between €220 and €225/t – both up about €5/t on last week.