The peak in grain prices has been reached this week, at least for the time being. The market is still very upset by the war in Ukraine and its consequences for the global grain and food supply. Does that also have consequences for the choices that Dutch arable farmers make for this season?
Wheat prices on the Matif were back in the plus. The differences between the highest and lowest quotes in one trading day normalize and the price fluctuations level off. The May contract is 1,3% higher, at €373 per tonne. Trading in the March contract closed on March 10, so the Matif's closing price jumped one more time. Traders and speculators had already reduced their positions by March, leaving only a limited number of contracts open. This means that the futures market may have reacted extra strongly in recent days.
The contracts for the new crop are between 3% and 4% higher and are now all well above €300 per tonne. The September contract currently stands at €326,75 per tonne. That will decrease to €306,75 per tonne for May 2023.
Rapeseed continues to rise
Corn prices were also on the rise on the Matif. The June contract stands at €349 per tonne. That is 1,4% higher than Thursday. The November contract is 1,1% higher at €269 per tonne. Rapeseed reached a new milestone on the Matif. The limit of €900 per tonne has been passed for the first time. The April contract was concluded at €904,50 per tonne, or 2,4% higher than Thursday, March 10.
If we compare the development of the wheat quotation on the Matif with the CBoT, it is noticeable that the American quotation has risen by about 7% since the start of the war until Monday 70 March. On the Matif, it remained at 45% over the same period. It is therefore in a sense logical that the CBoT has fallen much faster than the Matif in recent days: too much air had been pumped into the market. Today, most of the air seems to have run out on the CBoT and as of the writing of this article, almost all wheat contracts are on the rise again. Only the March contract is down 2,9%.
The important crop for Dutch arable farming: potatoes, is not participating in the rally on the market. The April contract on the futures market closed on Friday 11 March at €18,50 per 100 kilos. That is €0,10 below last week's closing price. The April 2023 contract did make a small profit and will end the week at €20 per tonne.
The onion market is also somewhat in a down mood. High costs for transport and processing and a bale price that does not want to rise makes sorters on the cautious side. On the other hand, growers do not want to drop in price very much. Current prices are roughly around cost price for many growers.
Scrolling in the construction plan
The building plans on many arable farms have in principle been filled in in pencil for some time. But the potatoes and onions are not yet in the ground and it is not too late to sow spring wheat, spring barley or maize, crops with relatively little risk and low yields in recent years. That has now changed. Wheat from the new harvest can already be sold on the physical market for €300 per tonne behind the combine. That's about a third higher than last year's pool prices.
In an environment in which gas oil and fertilizer are outrageously expensive and the resources package for onions and potatoes has been considerably thinned and there are doubts about the availability of various crop protection products, the farmer may make different choices. This actually applies to all arable crops, from potatoes, onions and carrots to contract crops such as chicory roots or canned peas. A crop with a higher risk is suddenly a lot less attractive if you compare it to grain at current prices. A first signal has in any case already been given by growers through a run on summer grain. Several suppliers are already short or have indicated that the stock of seed, especially spring wheat, is going very fast.