USDA adds fuel to the grain market

Arable farmers and stock traders took into account fewer hectares of grain corn and more hectares of soybeans in the US. However, the USDA, in its June Acreage and Quarterly Grain Stocks Report, writes about more corn and less soy. That, coupled with a record low wheat acreage, and extremely dry weather are enough ingredients to set things on fire in Chicago. On Friday, June 30, the July contract closed at $187,76 per tonne. A jump of $11,30 from the day before. The Matif in Paris also got a share. In two days, the September contract rose by €6,75, to €176,50 on Friday afternoon.

Wheat scores record low
Wheat reacted most violently on the last day of June. To start with, the USDA estimates an area of ​​45,7 million hectares, which is an absolute low. Previous forecasts mentioned 50 and later 46 million acres. The nation's wheat stocks, as of June 1, are estimated at 1,18 billion bushels. That was 976 million bushels last year. Slightly more than what the trade took into account. Another reason that fuels the wheat market is the low acreage figures from Canada.

Wheat quotation on the Matif futures market in Paris and CBoT in Chicago. More graphs? Visit the database!

Extreme drought
After an extremely wet spring, it is currently very dry in some states. North and South Dakota in particular are having a hard time. The long-term trend is also dry and hot. More than a quarter of spring wheat is rated as very poor by the USDA in the state of North Dakota. Only 40% are rated as good to excellent. In several states, wheat crops are being cut and pressed, or grazed by cows, because it is no longer harvestable for the combine.

Soy and corn not impressed
The futures contracts for soybeans and grain corn reacted less strongly to the news from the USDA. Yet there was surprise among traders and analysts, because the figures from the report did not match their ideas. After the CBoT recovers, the market will continue to watch weather conditions. In the 'Corn Belt' these are highly unfavorable for corn crops, due to heat and drought. This is not causing much concern at the moment.

Soy positive
The July soybean contract closed just under $30 per ton higher on Friday, June 10, compared to the day before. A small price increase was observed during week 26. Corn also rebounded and added a good $4 above the price. Further price increases for soy are being taken into account. A 'bearish' mood is being used for corn.

The USDA estimates the corn area at 90,9 million acres. That was 94 million acres last year. Soy goes from 83,4 to 88,7 million acres. The ending corn inventory, measured on June 1, amounts to 5,23 billion bushels, compared to 4,71 billion last year. For soy that is 96 million versus 87 million in 2016.