17.
03.24
13:38

Future grain price levels

Grain prices back on the path to fundamental-oriented pricing?! In the past 3 years, grain prices worldwide have come under the extraordinary influence of the Covid pandemic and the war in Ukraine, resulting in price explosions of unprecedented proportions. The consequences of this development have diminished over time. After the last price collapse around the turn of February/March 2024, the first signs of stabilization are emerging. The futures prices on the stock exchanges are again signaling upward developments for the coming financial year. But what can you expect? A look back into the past could provide initial guidance. It turns out that there is a fundamental connection between the global supply situation measured by the % of final stocks to consumption and the grain price level . A distinction must be made between typical time periods. (1) In the years 2009/10 to 2013/14 there was a particularly tight supply development, with global inventories hovering around the 20% mark. Average grain prices - measured by the FAO grain price index - were between 25 and 30% higher than the multi-year average. (2) In the period from 2015/16 to 2019/20, the supply figures exceeded the value of 30% of the final inventory to consumption and signaled a significantly above-average supply situation. Accordingly, the grain price index fell below the 100% line at times. At that time, bread wheat was quoted at just over €150/t on the Paris Stock Exchange. (3) In the 2020 to 2023 phase, the inventory situation fell again to the order of 26 - 27% of the final inventory for consumption, but the supply situation was dramatically exacerbated by the adverse effects of the Covid pandemic and in particular the war in Ukraine. The resulting supply uncertainty drove global grain prices up to 50% above average levels. However, over the course of 2023, grain prices fell significantly. With a view to the end of the 2023/24 financial year, the falling prices mobilized the held-back stocks and flooded the market. Recently, the price of wheat on the Paris Stock Exchange slipped below the €200/t mark. What's next? If one follows the latest assessments of the current and future supply/demand ratios, neither a very tight nor an abundant supply situation is to be expected. For several years now, the supply figure has been around 26% of the final stock to consumption. Based on previous experience, a price index level of 110 to 120% can be derived. That would correspond to an average stock market price (Paris) for wheat of around 200 to 220 €/t. Weather, economic and political risks remain unpredictable.

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