Bargain hunters see value in low wheat prices

Photo: Canva
Photo: Canva

The sharp drop in wheat prices has stopped. In recent days and weeks, the price has fallen so much that bargain hunters are starting to see value in it again. The result was a significant price recovery on the futures markets on Tuesday.

March-contracts remained just above the €200 per ton mark on the Paris futures market on Monday. The May-contract even fell to just below € 195 per ton. After Tuesday’s rebound, trading closed more than 2% higher than Monday’s price level. In Chicago the effect was even greater. The futures market there remained closed on Monday due to Presidents Day. The price difference compared to last week’s close was about 4%. This price recovery saw trading in the March contract in Chicago rise to just under € 200.00 per tonne.

The pressure remains high

EU feed wheat is trading € 11.50 lower this week at € 190.50 per tonne, which is € 31.00 lower than at the beginning of this calendar year. EU feed barley is only just above €180.00 per tonne and has already fallen by €28.50 since the turn of the year.

For the time being, it does not look like much will change in the market. The pressure remains on. Although less winter grain has been sown in Europe, harvest expectations in Russia and the United States are such that the new harvest will not escape price pressure for the time being.

Wheat harvest expectations

In Russia, an even larger wheat harvest is expected than last year. In the United States, the area of ​​winter wheat is about 6% smaller according to the first counts, but this is partly offset by more spring and durum wheat. Because fewer drought problems are expected, total wheat production will be about 2% higher than last year, according to initial estimates.

Polish protests against Ukrainian grain

This week there are again plenty of protests in Poland against cheap Ukrainian grain on the Polish market. At almost 200 locations, farmers and Polish trucks blocked highways and intersections and border crossings. According to the demonstrators, Polish traders have bought cheap grain in Ukraine to resell it to other member states. Due to logistical problems, this grain would get stuck in Poland and ruin the market there.

Figures show little Ukrainian grain goes to Poland

However, figures from the European Commission show that very little barley and corn from Ukraine goes to Poland. The vast majority of Ukrainian wheat, barley and corn goes to Spain. Italy is also dependent on imports from Ukraine for wheat and corn.

John Ramaker Commodities market editor, Boerderij
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