The futures market price for wheat on the Matif in Paris started the week with significantly higher prices. The price of the December contract rose by more than €9 on Monday afternoon. This exceeds the €300 level by far. The price level for the 2022 harvest is also taking on very interesting shapes. How can you as a grower benefit from this price?
At the time of writing (16:50 PM on Monday afternoon), the futures market in Paris is trading at €309 per tonne for baking wheat. The top was even one euro higher on this day. On Friday, November 19, a closing price of €300 per tonne was just missed, except for a quarter. The chance that this will happen on November 22 is almost irreversible.
Buyers keep buying
The market has various reasons for pushing the price level further up. To start with, there is the demand for wheat, which remains unabated. This week, various destinations are also tendering for baking and feed wheat. Interest remains at current price levels, despite food prices being at their highest level in a decade. Daring analysts are now predicting price levels around €350 per tonne for next spring.
Another direct reason is the heavy rainfall in Australia, where the wheat harvest is currently in full swing. A huge amount of water has fallen, especially in the state of New South Wales. Most rapeseed has now been harvested here, but that is a different case for wheat. Not only can the combines not get started, it also causes quality problems. Especially now that there is a high demand for baking wheat on the world market, an important supplier is once again handicapped.
Australian quality
After the 30% smaller Canadian wheat harvest and curbed Russian exports, Australia now also has a story. That couldn't have come at a worse time. This story will certainly haunt the wheat market worldwide. By the way, part of the wheat harvest has already been harvested. These growers now hope to be able to take advantage of the situation.
Most of the winter grains have been sown in Europe. What plays a role in the EU is the slow corn harvest, which means that not all the land was released in time. According to French government figures, more than 90% has been sown. In our country too, most of the crops have been sown and we are waiting for the last crops to be harvested. This mainly concerns sugar beets. According to preliminary figures and analyst estimates, the European wheat area is increasing slightly, by 1% to 1,5%. At least that's the idea now.
Price rises, margin does not
A small increase is also expected in the Netherlands. There will be no major shifts. Arable farmers are deterred by the high input costs that do not immediately translate the higher price into a higher margin.
It is possible that a category of late decision-makers will now sow wheat. When we see that the September contract for the 2022 harvest is quoted at €270 per ton in Paris, that is certainly an attractive price level for the coming harvest. It is not certain that wheat will remain at this price level next summer. It is €80 above the multi-year average.
Solid bottom
In the physical market it is possible to secure wheat now for next season. Both at the large cooperatives and private traders. They do pay a lower price than the Matif. On average, the price level is between 5% and 10% lower. In practice, amounts between €240 and €250 are mentioned, insiders say. This means it remains very interesting to do business now for next season and thus lay a solid foundation. In addition to physical sales, it is of course also possible for an arable farmer to trade on the futures market for grains.