Will wheat and maize prices return to 2018 levels?

The corn quotation on the Matif in Paris rose to €17 per ton on Wednesday, July 178,25. This means that the corn price continues to be at a clearly higher level than at the beginning of this year. This higher price level is supported by drought and heat in Europe, which will continue next week.

Uncertain corn market
The corn market is also very uncertain and this is mainly due to the situation in the US. While there is still uncertainty about the precise decrease in the area due to the extreme rainfall at the beginning of the season, there is additional uncertainty about the heat of the coming weekend. In general, US grain prices have leveled off after last week's gains.

If we look at the historical data, we see that around this time last year it became clear that European corn yields would be low. A real rally followed. The corn price is currently at a higher level than it was then. The coming heat period could well be decisive as to whether there will be another corn rally on the Matif.

Wheat longer term
The wheat quotation on the Matif rose yesterday, mainly due to the falling value of the euro against the dollar. The fact that wheat yields in Germany were reduced by 3,4% due to the heat wave at the end of June also played a role.

However, much higher wheat prices are not expected for the rest of this season. This is because the French wheat harvest that is now starting is showing good yields for the time being and elsewhere in Europe certainly not such low yields as expected last year. For example, for the German harvest, expectations have been lowered, but the yield expectation is still almost 4 million tons higher than the 20 million tons harvested in 2018.

Harvest in full swing
The harvest is in full swing in Russia and Ukraine. Although yields are lower than expected, especially in Russia, the total expected yield is still the second largest harvest ever. In Ukraine, yields have also been clearly lower so far, Agricensus reports, but it is expected that this will be adjusted upwards as the harvest moves further north.

Last year, the rally on the wheat futures market started as early as week 28, when it became increasingly clear that yields would be lower. For now, the coming heat period will no longer have much influence on wheat yields in the EU. Although yields in the EU have been reduced somewhat in recent weeks, this is not to the same extent as last year and the same rally as last year seems out of reach.

Russia will determine the price
In addition, wheat prices have risen in the past two months mainly due to the wet situation in the US. As a result, the price on the CBoT has risen by as much as 20%, says Rabobank. The price on the Matif also rose by about 10%. However, now that the harvest in the Black Sea region is starting, Russia is also starting to determine the price again. Partly for this reason, Rabobank also expects that the wheat price will certainly not rise.