Prices of soybeans, corn and wheat are skyrocketing at the CboT in Chicago. In addition, thousands of acres in the United States may not be seeded, while expectations of the global wheat crop continue to rise.
There are 2 main reasons for the strong price increases on the CBoT. The main reason is the delayed sowing of soybeans and corn in the United States. The rain prevents the machines from entering the field and the latest weather forecasts show that a lot of rain is expected in the coming period. At this moment, approximately 30% of the maize has been sown, compared to normally 66% at this time of the year.
Consciously do not sow anything
The risk is that farmers rely on their crop insurance. If sowing cannot take place after a certain date, farmers will receive partial compensation. In combination with the low prices and trade war, this could be an interesting option for them. However, the problem is that this risks leaving thousands of hectares unsown. As a result, corn prices reached their highest level in 6 weeks.
Wheat prices also rose due to this sentiment. After a number of sharp declines, the wheat quotation on the Matif in Paris showed an increase again last week from €1,50 to €172 per tonne. In addition, Australia has imported wheat from Canada for the first time in 12 years, which is necessary due to last season's poor harvest.
New hope in trade war
The trade war between the United States and China has also affected the prices. There is some hope for a new agreement. This is because an important American diplomat is traveling to Beijing at short notice. US President Donald Trump has promised that he will support farmers affected by this trade war with $15 billion.
Closer to home, expectations for the wheat harvest have been raised again. Germany, for example, announced that it expects the wheat harvest to be almost 20% higher, bringing it to more than 24 million tons. ABN Amro also recently published a report which shows that the supply of wheat is growing faster than demand. According to the bank, this is partly due to the good growth conditions in Europe.
Rate of the dollar
The International Grains Council expects wheat production in the European Union to increase by 8%. As a result, stocks are increasing and the wheat price is coming under pressure. ABN Amro does note that the dollar will weaken in 2019. With a weaker dollar, wheat sellers will receive more dollars for their product and will offer less. This lower supply will have a price-supporting effect.