The global grain market is not resigning to the situation in the United States. The stock traders are now going into the field themselves to assess how crops are doing in the Midwest. The hard data from the field should answer an important question: how is the harvest doing?
The figures presented by the United States Department of Agriculture (USDA) in its August WASDE report hit the grain market as a boom. This means that analysts, traders and other market participants have difficulty coming to terms with the facts as USDA presents them.
Figures from the field
About 100 interested parties will travel through 4 states in the Midwest for 7 days to assess crops. This is as part of the annual Pro Farmer crop tour. The WASDE report is supported by satellite data and surveys among farmers. Critics think there is little point in this. The figures are especially doubtful for parts of Ohio, Michigan and Indiana due to flooding and drought.
The news is very mixed. In the western Midwest (South Dakota and Nebraska), crops are in better shape on average than in the east. This difference is probably also reflected in the crop tour, which splits up for these areas. Due to the precipitation and late sowing date, the crops show many defects and are very late in their development. This makes it extra difficult to predict a good yield in a country that is otherwise very stable in terms of yield.
No confidence yet
In some states it is very dry, which hinders growth. However, there is also growing weather, which means yields may be slightly more positive. Due to these uncertainties, stock market traders such as hedge funds continue to cut their net-long positions on the CBoT. The news therefore remains 'bearish' instead of 'bullish'.
The price for corn fell in week 33 at the fastest pace since 2013. On Wednesday, August 14, the price bottomed at $141,33 per tonne, before closing one week higher at $1 per tonne. On Monday, August 146,06, the CBoT in Chicago is once again in the plus. The soy price suffered a much smaller reduction and also closed the week slightly higher.
European market
In Europe, the figures came at about the same time as the June contract expired in Paris. The September contract also fell, going from €172,25 per tonne to €167,75. The week ended at €168, but on August 19 the Matif in Paris is in the red again. In Europe, reports about the grain maize harvest are negative, due to the persistent drought.