On Tuesday 2 November, the December wheat contract on the Matif futures market broke the 2008 price record with a peak price of €297 per tonne of baking wheat. This brings the level of €300 per tonne within reach. A rare moment for the European cereal listing.
On the first day of November, the December contract already closed at a higher level than Friday, at €291,25. A plus of 3% or €8 per tonne. On Tuesday, the Paris stock market opened higher, reaching a high of €297 per tonne during the day. This breaks the old record of €295,50. That dates from March 7, 2008.
Haanstra's statement
Many a farmer has to think back to the winged pronunciation by former arable foreman Jaap Haanstra. "Within five years, the wheat price will exceed €300", he said during a meeting in 2014. The former LTO member was two years off, but the moment is now really close. The reason for making this claim at the time was the fact that the world needs a record crop year after year to meet the demand. That situation has not changed. A poor harvest in the EU and Canada, plus a Russian export market with restrictions, is partly responsible for extremely high prices.
Haanstra also said that the danger of the high wheat price is the high price itself. That has not changed either. A 'reality check' is possible when the Matif price taps this level soon. Possibly already in the coming days. What is driving up the latest price movement is the news that the Egyptian state agency GASC is buying 180.000 tons of wheat for delivery next month. All this wheat has been bought in Russia for prices between $364 and $365 per ton including transport. Converted that is almost €315 per ton.
Australian harvest
Saudi Arabia also contributed to the export bag by booking 1,26 million tons of wheat for the first quarter of 2022 and at a price of €353 per tonne. The world market is particularly looking forward to the Australian wheat harvest, which is now cautiously entering the market. The price level of this wheat is at an even higher level, around $400 per tonne. That is converted to €345 per tonne. The latest USDA figures predict an Australian wheat crop of 31,5 million tons. That's the third largest ever.
Barley and rapeseed also do well. The large amounts of precipitation – especially on the east coast – have not only stimulated good yields. They are currently ensuring that the harvest cannot run smoothly everywhere. In the longer term, especially given the ongoing La Niña weather pattern, quality is a potential concern. What doesn't help the Australians is the sky-high freight costs that put wheat from the country at a much higher price point. The costs per tonne are three to four times higher than before the corona crisis.
Agricultural inflation
Another factor driving price increases is agricultural inflation, especially for fertilizers. The price of this is rising much faster than that of wheat. It causes all commodities to go up in price. If arable farmers want to be able to benefit from the current price levels, selling prices must also increase. In the meantime, livestock farmers watch with gritted teeth. They see feed prices skyrocketing.