Experts are enhancing that there are four main reasons that currently determine not only the Hungarian but mostly the European grain market.
- Corona pandemia caused fragile supply chains, which significantly influenced the prices of the grains, similar to the gas or crude oil prices. The grains are not an exemption, and they also fit into the trend. The question of when this hectic fluctuation will recover will not be answered for a while.
- Ukraine-Russia conflict: as the EU and nowadays Hungary are feed corn importers from Ukraine either, the Russia-Ukraine crisis cast doubt on the feed corn import situation in the near future. The year beginning slight price decrease is expected to stop, and a gradual price increase is predicted, which is already priced by the market players.
- South-American new crop levels
- China grain import policy: China has increased its grain (mainly feed corn and milling wheat) import almost five-tenfolds. As per estimations, one-third of the global grain strategy stocks can be found in China. This strong purchase position is not expected to change in the future.
Hungary has been a net feed corn exporter until the very last interval. In the past year, it occurred the first time that Hungary has imported a more significant quantity of feed corn from Ukraine. It could have happened because the Hungarian feed corn price is steadily by 10-15 EUR/ Mt higher than the MATIF feed corn price; hence the import from Ukraine (and even from Serbia or Czech or Slovakia) has started.
The sales of harvested grains in Hungary is special. As there are big storage capacities in the country, the processors sell their goods in waves, mainly as per the price trends. The sellers are not forced to sell the wheat or corn at once right after the harvest. Traditionally arable production is the best bank-financed agricultural segment in Hungary. In this way, financial problems are not dangering the bigger market players.
Hungary is basically a wheat and corn exporter but has now turned the dice. The tense market situation is not expected to end soon, and the high price levels will remain with us apparently still for a while.
The current price level of the grains is almost 50% higher compared to the last year similar interval:
Milling wheat 281-310 EUR / MT FCA HU
Feed wheat: 280-290 EUR/ MT FCA HU
Feed corn : 256-265 EUR/ MT FCA HU
