Inside: Grains & Raw Material
Week 38: Wheat recovers painfully slowly
Although the markets for grains are slowly creeping up, it is very difficult. The December wheat contract on the Matif closed on Monday, September 18 at €161,50. That is lower than the previous close, but a lot higher than the bottom we saw in weeks 36 and 37.
Would you like to continue reading this article?
Become a subscriber and get instant access
Choose the subscription that suits youThe week started on Monday, September 18, with a reduction in the American and European wheat markets. The decline on the stock markets is due to technical sales. In addition, weather extremes are still a source of uncertainty.
(Text continues below chart)
This year the wheat price on the Matif is far below the five-year average.
Australia's harvest decimated
There are concerns about lower production in Australia, the world's fourth largest wheat exporter. Drought and early frost decimated the harvest to 20,1 million tons. That is 2,6 million tons lower than expected. This puts the 2017 harvest in ninth place in the top 10 of low records.
Russian mega harvest
Russia's mega harvest is also striking, but the Russians are finding it difficult to actually store it via rail and ports.
However, it will still be a significant amount that will hinder EU exports. Because the European Union also has a large harvest and the export opportunities are now decreasing.
Exchange rates
The strong euro against the dollar and the ruble also plays a role. This causes imports to increase, while exports lag behind. All in all, these factors mean that grain sellers are taking a cautious stance and stock exchanges are finding it difficult to stay upright.
The value of the Euro is rising against the Dollar.