Grain markets showed more volatility this week as wheat fell from the highs of last week, but recovered somewhat on Friday afternoon.
Matif wheat for May and September hit €190.75/t and €184/t respectively on Thursday evening, April 2. That’s the lowest those prices had been since March 19 when they were at €189.25/t and €183/t respectively. By Friday afternoon, they had increased, but not back to recent highs.
The volatility in the market may encourage farmers not to wait for a high. This week AgriLand spoke to Rory Deverell, a risk management consultant with INTL FC Stone, and his advice was that farmers should have 25-30% of their grain sold by now.
Demand for wheat and flour
Demand for wheat and flour increased in recent weeks due to the Covid-19 pandemic and Rory cautioned growers that this surge in demand may only have a short-term effect on the market.
He explained: “It’s probably going to be a short-term demand cycle. Everybody has rushed to buy pasta and flour. They have stocked up for a couple of weeks and months.
Also Read: A percentage of grain should be sold as seed leaves the drill“The shelves will get restocked and the off-takes from the flour mills will decline and they won’t be the strong buyers anymore.
I think that’s where we need to get careful as farmers – to remember that once demand is satisfied the elevated prices don’t need to stay elevated.
This week wheat prices fell across LIFFE, MATIF and CBOT markets.
USDA Prospective Plantings Report
The United States Department of Agriculture (USDA) published its Prospective Plantings Report on Tuesday, March 31.
Soybean area is also set to increase from 2019. It’s estimated that 83.5 million acres of the crop will be planted in 2020 – up 10% on 2019.
The wheat area is expected to decline by approximately 1%. The USDA estimates that 44.7 million acres of wheat will be planted in 2020.
In total, the USDA expects a total crop area of over 319 million acres in 2020. Following an extremely difficult year for US farmers last year – with wet weather delaying sowing into the summer months – it looks like crop area will return to 2018 levels, having fallen to 302.6 million acres in 2019.
Grain markets
As stated above, wheat took a tumble this week. On a positive note Paris rapeseed increased. Although Brent cruse oil has fallen some reports are putting this increase in price down to a slow down in palm oil production. On Thursday evening, Paris rapeseed for May was at €361.75/t.
Barley was not so positive. Spot prices for barley dropped significantly this week. On Friday afternoon, feed barley on the continent (delivered Rouen) was at €154/t – down from €162/t at the same time last week.
The Free-On-Board (FOB) Creil price for malting barley was also down. The 2019 malting barley price was at €148/t on Friday afternoon – down from €158/t on the same time the previous week.
