A very benign period of weather from mid – September to mid – October has allowed planting of winter cereals to progress very smoothly. Seed demand is reported to have been good – similar to the autumn of 2018 – but winter barley plantings are perhaps unlikely to reach the level of that season. Early reports from the seed trade also suggest an increase in oat plantings but it is too early to put an estimate on the wheat area yet.
Irish Native / Import Dried Feed Prices 27/10/2021
|Spot €/t||Dec 2021 €/t||Nov 2022 €/t|
|Dried Feed Wheat||280||280-285||235|
|Dried Feed Barley||270-275||275-280||220|
International Cereal Markets
Native grain prices have further strengthened again during the month of October on the back of global trends. MATIF milling wheat passed the significant milestone of €280/t late last week for the December 21 position. This price is very much seen as a watermark by the market and this last occurred in November 2012. On Tuesday the market strengthened even further closing at €285/t, not seen since early 2008. Such high prices for milling wheat typically to demand destruction in major importing countries and GASC tenders from Egypt have been cancelled in recent weeks due to these price levels. However, analysis from the AHDB statesthat global demand remains strong.
Irish native wheat is theoretically trading at broadly similar prices ex store where buyers are in the market. Prices for dried feed barley have also increased from approximately €250/t in early October to €270-€275/t now as we enter into November.
For the longer-term outlook, the current market is very much giving support to 2022 wheat futures. This is encouraging for producers but the old adage of “high prices cure high prices” could yet come to fruition in 2022. The fundamental driver of the increase in grain prices over recent months has been market fears over global supplies and a tightening stock to use ratio. However, if global stocks are not replenished throughout 2022, these high prices will likely remain for longer.
In the short term, a large Australian harvest of wheat and barley is expected in the coming weeks, with production forecast at 33% higher than the 10 – year average according to the Australian Bureau of Agricultural and Resource Economics (ABARES). It remains to be seen what effect this crop Down Under will have on global wheat markets.
Replenishment of global stocks will really only come from large wheat crops in the big exporters and in this context; there are already fears over dryness affecting autumn planting in and around the Black Sea region. Russian export taxes, designed to keep wheat in the country have increased, but this has the knock – on effect of reducing the area sown. SovEcon have forecast that the 2022 crop in Russia could fall by up to1.2M hectares. In central and western Europe, an EU MARS report states that planting progress is good and better harvests in 2022 in France and Germany will certainly help in re-balancing the stocks to use ratio. The winter wheat crop in the USA is said to be in a below average condition heading into the winter so this may provide a further area to watch.
For maize, the market sentiment remains broadly bearish, but this has not been reflected in prices. Imported maize landed in Ireland is trading in the range of €275-285/t. Freight costs are now at a much more significant level and are likely influencing the above quotes to a much greater level than pre the Covid-19 pandemic. Substitution of maize with barley in compound feed rations is now much more likely to occur in the UK and Ireland as a result.
The US maize harvest is progressing at a rapid pace in America, with 65% harvested as of the October 26th according to USDA figures. The compares with an average pace of 53% harvested historically. Back in the summer, markets became nervous over dryness in some Mid-Western states but a significant reduction in yields has not materialised to date and the final average bushels/acre figure isn’t likely to be very far off the big yields produced in recent seasons.
Rapeseed prices continue to remain exceptionally high on the back of heavily reduced global supply in 2021. Paris MATIF rapeseed for December 21 closed as high as €698/t on October 21st. For those fortunate to have dried oilseed rape in store, it is likely to worth in excess of €650/t. Future prices for August 2022 at the time of writing have surged to €570-€575/t, this means that growers here could now lock in 2022 crop at likely price levels of €530-540/t. The native winter oilseed rape area looks to have increased to approximately 13,000ha which is a very welcome development.
Soya markets remain comparatively quiet compared to other commodities, but the outlook is bearish overall. Values for imported soyameal are trading at between €410-415/t. Despite a La Nina weather effect in position for Brazil, planting progress of soybeans remains well ahead of average. This in turn provides a boost to the establishment of the following Safrinha maize crop in very early 2022.
The record – breaking prices currently being charged for various fertiliser products has been widely reported on to date. This will undoubtedly have an effect on crop production globally. Of particular interest in this area will be to see the possible effects on the type of crop planting decisions around the world. In the USA for example, could we see a shift away from maize towards soybeans or even spring wheat in the northern states? In central/western Europe could we see a greater shift away from cereals and into alternatives likepulses or even spring oilseed rape? The next 6-8 months are set to be very interesting period in this regard.