European feed grain is scarce this year

Exactly 1 week after the wheat price rally on the Matif, when the September contract closed at €216,25 per tonne, the Paris stock exchange managed to stabilize the decline. The close was €0,75 higher at €205,50. Corn also managed to make a small increase and ended €1 higher at €186,25. On the American stock exchange CBoT, prices for wheat, corn and soy were also higher. In the United States (US) it is therefore referred to as 'Turnaround Tuesday'.

Bottom reinforced
The grain market is out of 'bearish' news the WASDE report beyond. In Europe, the news that the Egyptian government tender GASC has purchased double the quota amount of wheat also helped. This means that a floor of €200 for wheat will receive more support. Expectations for European exports are 1,2 million tons lower this year. The US has the best cards in terms of exports. Analysts are wary of Russia. The government can intervene when it sees too much grain disappearing across national borders; this previously happened during a bad harvest.

A weak euro, whose price is being dragged down by the Turkish lira, is favorable for the export position. However, the question remains how desirable this is. With an export of 19,8 million tons of soft wheat, the ending stock is 9,5 million tons. This is very tight and undesirable for use in the EU. Since the barley harvest is also low, all eyes are now on maize as a feed raw material.

Strategy Grains has increased the forecast for EU maize use by 2,8 million tonnes to 61,3 million tonnes. It is also expected that more corn will be included in the ration. This means that significantly more imports are needed. The agency estimates imports at a record 19 million tons, which is 1,5 million tons above the record of the 2017/2018 season. Western and Central European countries purchase more corn from Eastern European countries. 

German import feed grain
Germany has started buying wheat from Romania as feed raw material. The country is, after France, the largest exporter of wheat in the EU, but this year's smaller grain harvest (-20%) turns the tide. German traders have now purchased 800.000 tons of Romanian feed wheat. Typically, most Romanian wheat goes to the Middle East, but this year the EU is offering higher prices.

Last season, approximately 30% was exported to the EU. Morocco and Turkey are no longer on the market, which means that other buyers are desperately needed. Spain is also an important customer. Ukraine mainly notices that European buyers from Germany and the United Kingdom (UK) are purchasing more corn than usual.

In the US the mood has changed. The extremely high yield per hectare of corn, which the USDA Agriculture Ministry forecasts, caused traders to despair. It has now turned to disbelief. New crop tours from the ministry should provide more clarity in the short term about the actual status of the harvest.

Availability of soy
Soy is also doing well worldwide. An initial forecast for the Brazilian harvest, from analyst firm Celeres, estimates that the area will increase from 35,1 to 36,2 million hectares. In theory, this results in a production of 119,6 million tons, which is 800.000 tons above last season. The country sees an important role for itself as a supplier to China, now that the US no longer occupies that position.

American soy crops are doing great. The growth phase is well ahead of other years. However, the price rose due to positive feedback for soy meal. The first shipment of American soy has arrived in China. The buyer pays $6 million in import taxes. Rapeseed, important for scrap, continues to rise due to declining European stocks and negative expectations for the Canadian harvest.The development of the feed raw materials over the past 3 months.