The wheat quotation on the Matif in Paris is again approaching €190 per tonne, and this price has already been shown on the board several times. The closing price continues to end slightly lower. What is needed to give the price 'a swing', or does the pressure remain too great?
Due to the favorable wheat export figures from France, the price on the futures market managed to recover from a trough. The low was reached on Monday March 11 at €184 per tonne. And, just like on Thursday April 4, the price also managed to close at €8 on Monday April 189,50.
Export figures give hope
The European Union has 15 million tons of soft so far this marketing season wheat exported, which is a minus of 4% compared to last season. However, about 2 months ago that difference was still 25%. There has clearly been more demand for European wheat, especially from North Africa. Wheat from the Black Sea region has priced itself out of the market, prompting calls for tenders from the United States and Europe. Argentina is also participating.
It is quiet for now at the CboT in Chicago. American traders and speculators are waiting for new figures from the US Department of Agriculture (USDA), although no shocking facts are expected. This is because the ministry will not release its first forecast for the coming harvest until May. Corn supplies are expected to weigh more heavily this month.
American contrasts
Sowing of grain maize has started in the southern part of the Corn Belt. This means that the work is on schedule compared to the multi-year planning. At the same time, there are still reports of the after-effects of the extreme weather and there are even weather reports that 40 centimeters of snow are expected in the northern states.
About 60% of American winter grains are in good condition, compared to 33% last year. Theoretically, this results in a higher harvest, which can offset the 3% decrease in area. The smallest area of wheat in 100 years is therefore not a free pass for a tight market.
Physical market has its own vision
The European price (futures) for the wheat of the new harvest is fairly stable, although the 'September 2019' contract in Paris recorded a minus on Tuesday, April 9. The warm weather in the European Union is causing a growth spurt in grains and at the same time the word drought is on the tongue. For the time being, this situation is not (yet) considered worrying by analysts, but this could change quickly.
Physical (feed) wheat prices in Germany, the United Kingdom and France are stable. This means they are slightly further out of step, compared to the forward contract. Exporters have a different idea of the market than stock traders. They view exports positively. Feed and malting barley prices are also stable.
Further prospects
If the export engine manages to keep running, the barrier of €190 per tonne can be broken and the price can continue to rise. However, there are more privateers on the coast. Egypt says it wants to secure more wheat stocks for a longer period, although financing is a problem. For the new harvest, the condition of the crops and the (soil) moisture status are particularly important.