The wheat listing on the CBoT has broken the psychological barrier of $1.000 per bushel. Where can we get grain? That is the question traders are asking. As long as there is no answer to this, the market can continue to take steps upwards.
The March wheat contract closed on Tuesday evening, March 1, Dutch time, at $1.007,75 per bushel (the equivalent is approximately €334 per tonne). After the opening, that price rose further, to $1.009,25 per bushel (€335 per tonne). The May contract rose even faster. After closing at $984 per bushel, the price now stands at $1.059 per bushel (€352 per tonne). That is an increase of 7,6%. The July contract has also passed the $1.000 mark and stands at $1.025 per bushel (€340 per tonne). These are the highest prices since March 2008.
The March contract for wheat on the Matif closed on Tuesday, March 1, at €351,25 per tonne. That is an absolute record and almost €40 higher than the previous peak; in November 2021. The May contract closed at €340 per tonne. It is already possible to cover above €300 per tonne for the new harvest, September closed at 306,50 per tonne. The corn price also closed considerably higher, at €340 per tonne. That is €20 above the old record.
Where can I get wheat?
Russia and Ukraine are major grain exporters. This export largely flows through the ports on the Black Sea. Those ports (particularly in Ukraine) are now closed and ships cannot enter or leave. The fighting also damaged the infrastructure needed to get grain from growing areas to ports. According to insiders, it is difficult to estimate the extent of that damage. However, international grain traders assume that even if the fighting stops immediately - which does not seem likely - the supply of wheat from the area will remain disrupted for longer.
There is therefore a diligent search for countries that can fill the gap created by the disappearance of Russia and Ukraine. However, both countries have such a large export volume that it is difficult to fill this volume. Hence the current unprecedented price increases. Better expensive than not for sale, that is the sentiment among traders. A further price increase cannot therefore be ruled out, insiders report. Even a wheat price of €400 per tonne is not considered unthinkable.
There are also concerns for the new harvest. Wheat in Russia and Ukraine survived the winter well and until one week ago the forecasts were 'good' to 'very good'. But just as grain cannot be produced, it is also difficult for farmers to get fertilizer, crop protection products and machine parts into the field. Whichever way you look at it, that costs revenue. Crops such as spring barley, corn and soy still have to be sown and the question is whether the planned areas can actually be sown. This is already visible on the futures markets from the relatively high prices for the contracts for the new harvest.