Agribusiness News March 2025 – Cereals

Global overview

Although we’ve not seen it here, global grain prices have risen in recent weeks reaching multi-month highs due to tightening stocks and weather-related risks. The USDA’s latest reports indicate declining stock levels providing strong market support. Agricultural markets are expected to maintain a firm tone, possibly stronger than in the past two years.

Currently severe cold in Russia and Ukraine is threatening winter crops, particularly in areas with insufficient snow cover. Similarly, the U.S. state of Kansas, a major and significant wheat producer, is experiencing record-low temperatures, which may result in crop damage. In South America, La Niña-driven drought and extreme heat have impacted crop estimates in Argentina. The USDA has lowered its corn production estimate to 50 million tonnes (MT), though local estimates are 4 MT lower. Soybean conditions are worse, with only 15% rated good to excellent. Recent rainfall may stabilise the situation. Meanwhile, Brazil’s central region is drying up, accelerating fieldwork. Soybean production is projected to reach a record 165-170 MT, and most of the second corn crop is expected to be planted without major setbacks. In Europe, excessive rainfall in northern regions, particularly the UK, France, and Germany, is raising concerns. In contrast, dry conditions in Central Europe and the Black Sea region may impact yields. The overall winter crop area has increased, but spring weather conditions will be crucial for production potential.

Market movements

Funds have adjusted their positions in response to lower stocks, limited Black Sea exports, and emerging crop risks. The shift in market sentiment has led to price rallies, albeit out-with the UK, with funds covering shorts and moving towards long positions on MATIF wheat. A weaker euro has also improved European wheat competitiveness, boosting exports and supporting EU prices. Conversely, the strengthening of the Russian Ruble due to ongoing peace talks has made Russian wheat less competitive, increasing global wheat prices. Despite these rises, MATIF wheat has remained relatively low due to sluggish export demand. EU exports are currently 7.5 MT below last year’s levels as buyers continue to prioritise cheaper supplies from the Black Sea, Argentina, and Australia. However, Black Sea availability is expected to be 50% lower than last year, potentially shifting demand back to EU wheat later in the season.

UK wheat prices have remained relatively flat due to strong EU imports and an unfavourable currency impact. A strong Sterling (at 1.21 against the euro) has made UK wheat exports less competitive while making imports cheaper. Without this currency effect, LIFFE prices would be closer to £200 per tonne. The appreciation of Sterling against the euro (+4%) equates to an £8 per tonne price loss. We still have 50% of the UK wheat crop to sell. The first half was sold at season highs above £200 per tonne, but further sales for many, wait in anticipation of stronger EU demand. However, this demand has yet again failed to materialise, creating a risk of last-minute sales pressure. For the new crop, there is more time to assess the market. Nov 2025 futures have been weakening to £193 per tonne as February closes out and sales decisions for the new crop may best be postponed until April-May to capture potential market upswings.

Outlook

While so far UK wheat prices have been slower to react, they are expected to follow broader market trends. The International Grains Council has lowered its 2024/25 global maize and soybean production forecasts due to weaker outlooks in Brazil and Argentina. Global maize production is now projected at 1,216 MT, down 3 MT from previous estimates, while global soybean output has been reduced by 2 MT to 418 MT. Wheat output, however, has been revised up by 1 MT. In summary, while adverse weather conditions and shifting market dynamics continue to shape global grain markets, UK wheat prices remain under pressure from currency movements and slow EU export demand. However, a shift in global demand could lift prices later in the season.

Mark Bowsher-Gibbs, mark.bowsher-gibbs@sac.co.uk 07385 399 513

 

Indicative grain prices week ending 28/02/2025 (Source: SAC//United oilseeds/AHDB/Hectare)

£ per tonne	Basis	Mar ‘25	Jul ’25	Nov ’25	Mar ‘26
Wheat	Ex farm March; Futures thereafter	195	187	192	199
Feed Barley	Ex farm March; Futures thereafter	172	163	177	184
Malting Barley	Ex farm March; Futures thereafter	205
Oilseed Rape	Del Dundee	429	435	407	412
Beans	Ex farm Scotland	213			215