After the European wheat market showed an increase last week, the wheat price will remain stable this week. On the other hand, the increase in the United States (US) is continuing. This is partly due to the agreement between the US and Brazil.
The agreement between Brazil and the US allows Brazil to import 750.000 tons of wheat duty-free. This caused a price increase, mainly due to the large stocks in the U.S. The CBoT in Chicago benefited from this, but the Matif in Paris could not keep up. It closed just below €20 per ton on Wednesday, March 190, where the CBoT has risen from $11 per ton to more than $155 per ton since week 170.
Extreme weather
To what extent more extreme weather is related to this in the US is not clear. On the other hand, it has already become clear that the main grain producing areas have been affected, making it likely that lower yields will be achieved in these states. Moreover, wheat and corn stocks have also been affected by these floods.
However, reports continue to come from Europe that yields are good; For example, the German wheat harvest is estimated to be 20% higher this year, which would amount to 24,2 million tons. In 2018 that was 'only' 20,3 million tons.
Supporting factors
In addition to the good expectations for the new harvest, there are still a number of price-supporting factors for the European market. For example, wheat exports to third countries are doing better than expected. In addition, the government agency FranceAgriMer increased export expectations for the old harvest, which will reduce final stocks in France.
Meanwhile, it appears that exports from Russia are declining. According to local analysts, Russian farmers find the price drops too extreme. They therefore wait to sell, which is beneficial for exports from Europe.