The Mintec Category Index (MCI) for EU cereals has maintained a downward trend, following the peak of EUR 229.6/MT during mid-May. The index fell for nine consecutive weeks to reach EUR 196.34/MT on 14th July, this represents a drop of 4.7% compared to the same period the previous year.
Cereals prices have fallen sharply in the EU market, driven by falling US maize (corn) prices on the back of improving weather conditions in the Midwest. The slide in prices was further reinforced by the extra supply associated with the arrival of the wheat harvest season in the Northern Hemisphere and tepid purchase volumes from China.
The EU is forecast a rebound in wheat and maize production for the 2021/22 marketing year. Although the wheat and barley harvests are expected to be slightly delayed this year, yields are projected to be higher than average in most of the region. However, market concerns are currently rising around potential rainfall impacts on wheat and barley grain quality following the recent wet weather in south-eastern and western Europe in the third week of July.
On the other hand, the recent rains have been favourable for the maize crops. According to Strategie Grains, EU maize production is forecast to increase by 2.4 million tonnes y-o-y to 65.7 million tonnes in 2021/22.
Overall, wheat and maize prices are likely to remain very dependent on the global situation in the short term. EU wheat prices are expected to fall as the harvests continue to progress and hit the market. Maize prices, however, are likely to remain volatile until Northern Hemisphere harvest outcomes are assured. Meanwhile, EU barley prices are likely to fall due to increasing competition from the Black Sea.