Wheat prices on the international stock exchanges were cautiously on the rise again on Thursday 17 March. The market is still struggling to estimate the consequences of the war in Ukraine on the supply of grain. Both for the short and the long term.
The May contract for wheat closed yesterday on the Matif at €367,75 per tonne, a plus of €4,25 per tonne. The contracts for the new harvest also show an increase. The September contract stands at €325,50 and will increase to €305 per tonne for the May 2023 contract. Wheat prices on the CBoT rose 2% to $1.098 per bushel. This translates to approximately €365 per tonne. The contracts for new harvest rose slightly faster, with percentages between 3% and 4%. The corn quotation took a step back on the Matif, while the CBoT increased.
The driving force behind the relatively high grain prices remains the conflict in Ukraine. The market is therefore very volatile and reacts very unexpectedly and overly sensitively. A seemingly small news item or rumor immediately causes a reaction. For example, on Thursday the French market agency Strategy Grains calculated that due to the problems in the Black Sea region, 11 million tons of wheat and 12 million tons of corn from the 2021/2022 season may not be sold on the world market. The market responded to this.
German harvest forecast
The German association of cooperatives, DRV, expects an average harvest in Germany this year. For grain, this assumes a yield of 43,2 million tons, an increase of 2,5% compared to last year. The expected harvest is therefore just above the expected demand. A peak of 50 million tons or more is not expected, DRV reports. "To achieve this, everything (including the weather) must be good during the growing season," the organization writes.
But the problems in the supply chain of fertilizer and crop protection products are already noticeable. The rapeseed harvest is estimated by DRV at 3,9 million tons, an increase of 11,6%. This is mainly due to significant growth in the area. Last autumn, 9% more rapeseed was sown. DRV also expects a significant expansion in the area of spring barley, due to attractive prices for malting barley. The area on which spring wheat and grain maize is grown remains approximately the same as last year.
The DRV is also very critical of the plans contained in the new Common Agricultural Policy (CAP). The criticism is mainly aimed at the mandatory set aside of 4% of the area. In Germany, this amounts to almost 500.000 hectares, on which (in theory) approximately 3,5 million grains can be grown. Germany thus falls below the level of self-sufficiency. That, according to the context, is an incorrect choice. The common goal must be to produce more sustainably in the future.