Wheat and corn quotations on the Matif and CBoT took a step back yesterday. This is partly due to speculators who have taken their profits. The drop in crude oil by more than $5 a barrel is also affecting the grain market, according to some analysts.
The May contract for wheat on the Matif closed at €399,50, just below the €400 limit. The contracts for the new harvest also took a step back. The September contract closed at €365 per tonne and that will decrease to €355,25 per tonne for the May 2023 contract. Wheat quotes on the CBoT show a similar picture. The price of corn on CBoT fell 1% to $804 per bushel. Soya and rapeseed do not participate in the price correction. Soy rose marginally by $1,50 to $1715,50 per bushel and rapeseed plus €14 to €1018 per tonne.
Several analysts cite speculators who are now taking profits after the rally in recent days as the cause of the correction in wheat and corn prices. For maize, the price of crude oil is also viewed with a slanted eye. Part of the American corn is processed into bio ethanol for blending into gasoline. This creates a strong correlation between oil and corn prices. The rise in soy is called remarkable by analysts. Some of the soybean oil is used in biodiesel, so a certain relationship with the oil price would not be illogical here either. In addition, the export of soy from the US is not going well.
China waits
US customs data shows that China imported significantly less soy in March this year compared to the same month a year earlier. In the first quarter of this year, China imported 30% less soy compared to the first quarter of 2021. On the other hand, China imported significantly more soy from Brazil. That could easily change in the near future. The Brazilian harvest was lower than previously expected and US exports suffered a significant delay in the first half of the season due to the damage caused by Hurricane Ida. Chinese buyers are also somewhat reluctant to buy soy. The margins for pressing the oilseed are moderate. The price of oil is high, but there is less demand for soya meal. The pig sector is the main buyer of scrap. Demand from this sector is disappointing due to poor pig prices.
Ukraine also continues to occupy the grain market. Yesterday, Jakob Kern of the UN World Food Program expressed his concerns to Reuters about the limited storage capacity of grains in Ukraine. Various sources expect that 20% of winter crops cannot be harvested this summer and that the acreage of summer crops will be about a third smaller. Despite this, it is estimated that 15 million tons of grain from the 2022 harvest will be out of silos in Ukraine, according to Kern. He bases this on data from the Ukrainian Ministry of Agriculture. Normally up to 6 million tons of grain is exported through the ports on the Black Sea. That has now stopped. As a result, not only is insufficient storage space available for the new harvest. The flow of cash needed for farmers to buy seed, fertilizer and crop protection products for the new crop year is also drying up.