Week 39: Who Breathes New Life into Wheat?

The currency relationship between the euro and dollar is an important topic on the grain market. In addition, the development of crops in the southern hemisphere is an item. Particularly those in Australia and Argentina. The futures market level of €163 per tonne is seen by analysts as a provisional bottom for wheat. However, it is difficult to indicate how strong this soil is. The strong euro is an additional handicap for Europe.

EU net exports lower
The European Union (EU) exported 13 tonnes of grain in the period between September 19 and September 985.055. This concerns 533.272 tons of wheat and 259.638 tons of barley.

In addition, more than 902.000 tons of grain were imported. The import volume consists mainly of corn: 637.839 tons. On balance, the European Union has net exports of 1,1 million tons, compared to 6,1 million tons in the same period last year.

Dollar not a panacea
It is not said that countries that pay for their grain with the dollar immediately sell more volume. For example, wheat exports from the United States are lagging behind last year, when the euro-dollar exchange rate was less favorable.

Ukraine has also exported less wheat. Between July 1 and September 19, 130.000 fewer tons were exported compared to 1 year ago. The total volume amounts to 9,47 million tons. Of this, 55% of the volume comes from wheat and wheat flour. The rest consists of barley and corn.

Sowing is going well
In the Northern Hemisphere, sowing operations for the 2017-2018 season are in full swing. Considerable amounts of rain caused problems at the beginning of September, but sowing is now taking place everywhere. In any case, there is no shortage of striking power.

Sowing is also going well in Eastern Europe. Dry conditions in Ukraine make precipitation desirable for germination. Canada has already adjusted its yield forecast for the 2018 harvest, from 31,2 million tonnes this year to 27,1 million tonnes next year.

Water damage in Argentina
In Argentina, floods caused by heavy rainfall damage crops. The size of the harvest is still unclear, but insiders believe that the harvest will be negatively affected by the heavy rainfall. In Brazil there is a precipitation deficit. Problems in South America have a small effect on the price formation of barley, corn and soy.

Matif scrambles up
The September contract on the Matif in Paris was settled at €149 per tonne. The December contract then started at a level of €161,25 per tonne. The lowest price level of this contract period in September.

On Tuesday, September 26, the futures market closed at €166,50. Turnover at the start of week 39 is high. More than 20.000 contracts were traded on Monday and almost 25.000 on Tuesday. The highest turnover since mid-July.

The turnover of the number of contracts on the Matif has not been this high since mid-July.