Week 20: low euro rate supports wheat price

The wheat price fell last week due to the publication of the WASDE report. The report assumes an increase in the wheat harvest in the United States (US). However, at the Matif in Paris, the wheat price showed an increase. The cause of this is the low exchange rate of the euro (relative to the dollar). This is good for European grain exports.

The wheat price took advantage in addition to reports of wet conditions in Russian spring wheat production areas. In the meantime, wheat has grown enormously in the Netherlands, but also elsewhere in the European Union (EU). In the Netherlands the disease pressure is low, although more damage to yellow rust has been reported.

(Text continues below the chart)The wheat quotation on the Matif in Paris is rising again.

Declining trend of the soy price
The soybean market is volatile, but is currently showing a downward trend. On Wednesday, May 16, the listing on the CBoT in Chicago ended lower. This is due to concerns about the ongoing trade dispute with China, which is reducing demand from that country. As a result, the funds sold more than 12.000 contracts of soy beans.

Brazil will become the largest soybean producer in 2018, or so is expected. It is the first time in history that this has happened. Brazil is expected to harvest more than 117 million tons of soy, while number 2 (the US) will harvest 116 million tons. Brazil is already the largest exporter of soy.

Growth in Brazil
Brazil is expected to further expand its position as the country expands its agricultural area. The area is growing by 500.000 hectares per year, which means an increase in yield of 2 million tons. More than 35 million hectares are expected to be planted in Brazil for the coming season.  

A large part of the corn in Brazil has also been damaged by the drought. There would be about 15% less harvest. The second corn harvest will start in 40 days.