Grain prices remain at a high level

26-02-2021 | |
Photo: Peter J.E.Roek
Photo: Peter J.E.Roek

A strong demand supports wheat and corn prices on the world market. The futures markets show that expectations for the price of wheat in particular are tense, partly due to recent and coming cold conditions in production areas.

The high corn and soybean prices in recent months are affecting the plans of American farmers. The latest figures on their acreage show that they are expanding them considerably to a record total of 73.7 million hectares. This is evident from figures from the United States Department of Agriculture, which has presented expectations for the 2021-22 financial year. An estimate of US wheat production is 49 million tons in that financial year, and 384 million tons of corn is expected. For wheat this is in line with the forecast of market analysts, the quantity of maize was estimated to be higher.

Risk of frost damage

The cold is now playing a role in several production areas for the coming wheat harvest. In Western Europe it is getting warmer, as in the United States. It is not yet known what the consequences of the recent harsh conditions in the United States will be for the coming harvest, but the very severe frost that there was in Texas in particular suggests considerable damage. Meanwhile, the course of an expected cold spell in Russia is being looked at with suspicion.

Rapid demand

The March 2021 contracts on the Paris futures market will soon expire. The prices are rising. Wheat has become almost 7% more expensive in a week and corn more than 4%. In Chicago, forward prices also rose for March, but less rigorously.

There is a rapid demand for grains on the physical market worldwide. The price indexes of wheat, corn and barley rose last week. The fact that Argentina will compete more strongly with the US with its maize has an influence on maize prices. Argentina will not, as previously announced, increase export tariffs for corn and soy.

Jack Kwakman Freelance journalist