Wheat prices at around €300/t could be the new norm for the market, according to the Agriculture and Horticulture Development Board (AHDB).

The organisation’s economics and analysis director, David Eudall, spoke at this week’s Ulster Arable Society annual conference.

According to the AHDB representative, grain markets are very much dictated by supply and demand. But these factors can be crystallised into one very fundamental indicator i.e., the stocks / to use ratio.

“Currently this figure is sitting at around 19%. This is an historically low value, which would point to the potential for grain market prices to increase somewhat over the coming months,” Eudall said.

“The grain produced last year is now, for the most part, through the system. And the market is looking towards the harvest of 2023.”

Grain markets and crop prices

Eudall is predicting a severe weather event or a political development taking place in the northern hemisphere over the coming spring months, the impact of which will have a strengthening effect on grain markets.

“It’s unlikely that the price peaks of 2022 will be reached. However, we are looking towards a future that must take account of Ukraine and the Black Sea region not being major export players on world markets, at least in the short-term.

“And, if this is the case, the scenario unfolding will be one that sees the rest of the world finding ways to make up for this significant shortfall in grain production.”

Eudall stressed the need for cereal growers to factor in a long-term understanding of the risks posed to their businesses as they plan for the future.

The AHDB representative indicated that South America will become an increasingly important player on world grain markets over the current years.

He based this assertion on a number of factors, including land availability and the ongoing impact of climate change.

“Farmers in Brazil can grow three crops of maize annually. And the current prospects for maize production in that country are extremely positive,” he explained.

“In contrast, drought is impacting on Argentine crop production at the present time.”

Here in Europe, the harvest prospects for the current season are well down, relative to the output secured in 2022.

“Winter planting rates are well down in Ukraine, across all crops,” said Eudall.

“In Russia the latest 2023 grain harvest prediction has come in at 84.8mt, down from the 100mt figure of 2022.

“We are about to reach a tipping point, where northern hemisphere grain prospects for 2023 are concerned.

“All it would take is for one development, a serious weather event for example, to send cereal markets on an upward trajectory,” he concluded.