Grain Prices: markets continue to show signs of improvement

Grain markets continue to show signs of improvement, albeit at a slower pace than recent weeks. MATIF December wheat closed last week at €188.25, up from €186.50 a week earlier and it closed on Monday night at €188.50/t. Chicago December wheat ended the week at $202.18/t having been higher during the week.

This is happening despite a lack of drivers for the fundamentals. Yet again, we have seen SovEcon raise its estimate of production, this time to 82.6mt, up 1.4mt on the last estimate, according to the latest AHDB report.

So the background numbers indicate that, yet again, many of the major wheat exporting nations, such as Russia, Canada, Australia and Ukraine, are all now expecting big internal supplies, which will also mean big exports. It must be anticipated that this will inevitably put pressure on international wheat prices, unless the overall production of maize is badly hit in global markets.

Maize seems less certain

The situation with maize remains more uncertain. Chicago December maize prices are still being driven by uncertainty surrounding the impact of severe weather on the US maize crop. Chicago prices have moved from $3.20/bushel to over £3.60/bu in recent weeks, but that is still well below the cost of production for many grower so will they be able to resist selling at these low prices?

Last week, the USDA indicated a further decline in overall crop condition ratings for its maize crop. This is now questioning the likelihood or ability of the US crop to achieve the record maize yield that was forecast for 2020. Any lowering of yield in the US crop would leave a significant dent in production, but it would be unlikely to be big enough to push maize into a global deficit supply situation. So weather and crop growing conditions elsewhere, especially in South America, are still of significant to global production and market sentiment.

Oilseed rape

An increase in the price of vegetable oils in recent weeks has added value to many of the oilseed crops. But currency is also a factor in the market and dollar-euro movements lessened this impact on oilseed rape prices. However, MATIF prices remain around €384/t to €385/t, with trade prices here in the €375 to €380/t bracket.

Native prices

Nearby wheat remains in the region of €197/t through to November, with barley at around €175/t. Glanbia this week offered a green grain price offer of €162/t for wheat and €140/t for barley. Remember that this price does not include any bonus payments to co-op members.

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Grain prices continue to nudge upwards