The European cereals listing in Paris also opened strongly on Monday, August 16. A peak of €259 per ton was tapped around noon, after which the price fell slightly again. Looking at the net long positions, stock traders and funds are still confident. This keeps the foundation under the market very solid.
On Friday, August 13, the Matif closed at a price level of €254,50 per tonne for the September contract. The contract for December was just below this and the March and May contracts were all above €250 per tonne. The September contract expires on September 10, which could push the price up much further in the run-up to the expiration date. An increase to the €300 level is therefore more likely than €200.
Physical price levels
The market is looking for a new balance with the information it has had to process last week. In Europe this resulted in a significant price jump on Friday. In one week, the European price rose explosively by €25,25 per tonne. Physical prices have also increased considerably. In the Black Sea region, trade is taking place at price levels between $280 and $320 per tonne, depending on the delivery time. What is special is that freight costs for long-distance destinations amount to up to $330 per tonne. The price of this has now become more important than that of the product itself. Especially because the buyer has to pay for transport himself.
Countries in the Middle East, for example, continue to purchase wheat through tenders and other means. It is especially a challenge to find wheat of sufficient quality. The distinction between milling and feed wheat is therefore great. The Black Sea region has an advantage here because the country harvests better quality than the European Union. Countries such as Romania and France are experiencing disappointing quality due to the heavy rain this summer. French grain trader Group Soufflet reports that only 35% of all wheat received has a hectoliter weight of 76kg/hl or higher, which is required for milling wheat.
Low hectoliter weight
In the Netherlands we also notice that the hectoliter weights are lower than we are used to. In the southwest it is slightly better than in the center and north. CZAV reports that it received 125.000 tons of wheat last week. The cooperative has now received 80% to 85% of all wheat. The hectoliter weight is on average 75 kg/hl. Agrifirm Plant talks about levels between 73 and 78. The yields are average to below average everywhere. They vary from 7 to 9 tonnes, with levels being considerably lower than usual, especially in the north.
Last week the majority of winter wheat was harvested in many places. Some parts still need to be harvested in the southwest and south. The coastal regions in the northwest and north are also not yet ready. The question is when combining can start again given the current changeable weather. It is also clearly noticeable that workable hours are lower because people start late in the morning and stop early in the evening. Arable farmers elsewhere in Europe have also harvested a lot of grain. However, the harvest has not yet been completed in France and Germany, among others. Export demand is good and rain sometimes throws a spanner in the works.
Changing feed market
A wheat price level above €250 per tonne is historically high. Such a price often does not last in the long term. An exception is the 2012-13 season. The price has not been this high since then. For example, the feed market also changes at prices above €250. It then becomes more interesting to use corn instead of wheat. The grain maize harvest is still considered positive, especially in France. Internationally, the corn harvest has actually been adjusted downwards. This is especially the case in the US and Ukraine.