The wheat market rollercoaster train has nearly arrived at its terminus, but not before catching another loop or two. Yet this commodity is not the product showing the strongest movement.
The wheat contract for March on the Matif peaked a week ago - at €250 per tonne - but then plummeted. The contract will expire on Wednesday 10 March and the switch will be made to the last delivery period for harvest 2020: May. Today (Monday 8 March) the contract shoots up again. At its peak, it trades at €240 per tonne on Monday afternoon. The May contract is also on the rise.
What does new crop do?
There is still a gap of about €28 per tonne between May and the new harvest in September. The coming months will show whether the price of wheat from the new crop will rise further or whether the old crop will fall. The tight availability of wheat in the EU suggests that the wheat price has a solid foundation in the short term. When it is more clear about how the wheats are developing this spring, more can be said about the size of the 2021 harvest. For the time being, there are no worries and this volume will increase.
This situation is different with rapeseed. Market bureau Stratégie Grains has revised the expected closing stock downwards by 180.000 tons to 1,1 million tons. This is a reduction of 800.000 tons from last year, which was already a bad year. The cultivation of rapeseed in Europe has been in a slide for years. This year, the acreage has increased at least to 5,53 million hectares (+50.000 hectares). According to Stratégie Grains, this means a harvest of 18,2 million tons is possible. That is 1 million tons more than in 2020, but still well below the 20 million tons mark. That has happened only twice in the last 11 years.
New record
A tight availability of rapeseed pushes the price up to a record level on the Matif. On Friday, March 5, the price already closed at €515 per tonne. On Monday afternoon, the May contract is even worth €527,75. This means that the old record from July 2012 of €525,25 per tonne has been broken. This is the highest price level in more than 30 years.
Two factors are pushing the rapeseed price up. First of all, the soy price is on the rise. Brazil's soybean harvest is delayed due to persistent rain. This gives the US listing of the CME Group a boost. Because soy oil prices also rise as a result, rapeseed can benefit. Another factor is that arable farmers who still have rapeseed in storage are reluctant to sell now in a rising market. Even the supply of rapeseed from Australia is not causing the European market to loosen the reins.
Harvest 21 on the rise
The new harvest is also on the rise because of the imminent smaller harvest. On Monday, the August contract is trading at €447,50 per tonne after closing at €5 on Friday, March 442,50. A smaller harvest is also expected outside Europe. 20% less rapeseed has been sown in Ukraine because arable farmers choose sunflowers more often. This crop is also much more popular in Russia. The price of sunflower oil has also risen. What Canada and Australia will do with their acreage remains to be seen because the sowing season has not yet started there.
Not only the price of vegetable oils is rising, but also that of the by-product rapeseed meal. In January the price level was € 325,15 per tonne. That level was last reached in June 2013. A price for February has not yet been announced. Given the current movement of rapeseed, the scrap price could also increase considerably. Other feed raw materials such as soya meal are also on the rise.