Rainfall in the United States is causing the soybean and grain corn markets to take a step back. What also affects the market is that China, the largest buyer, is taking it easier. In Russia it is precisely drought that plays a major role.
Last Wednesday, soy prices on the CBoT fell to a close of $514,78 per tonne. This decline continued on Monday and the price reached its lowest point in 2 weeks. The main reason for this decline is that better weather is forecast in the Midwest, which is positive for soybeans. This mainly concerns significant precipitation.
Less Chinese trade
Another reason for the decline is that China has canceled an export order and exports are expected to decline further in the second half of this year. In the first half of 2021, exports reached a record after Brazil was unable to supply enough soy to the Chinese. The US is not helped by its dollar, which is at its highest level since early April. In addition to soy, a huge amount of sorghum and barley has also been imported.
The arrival or absence of rain currently strongly dictates the markets. For example, only scattered rain fell in the Midwest last weekend. However, growers and traders are slightly more positive about the corn harvest in the western part of the 'Corn Belt', which also causes the price to fall. Due to the favorable expectations in August, the market is very subdued.
Drought in Russia
In the Black Sea region it is very dry and this can damage summer crops such as spring wheat, sunflowers and grain maize. The wheat price also notices this. That of winter wheat from Russia rose last week to $248 per tonne. The dry weather ensures that the harvest of winter wheat in the south and southwest can proceed at a higher pace. Because the export engine is now starting to run and ships are calling at the Black Sea ports. Exporters are still trying to trade quickly to fill these ships, which means a price increase.
Russia is dealing with a variable export tax for the first time this year. This tempers export expectations partly due to uncertainty because the amount is variable and depends on the market price. In July, 1,8 million tons of wheat are expected to be exported. That is the smallest export in 4 years. Because a large harvest is still expected, exports must start quickly to be able to export sufficient wheat. This can have a downward effect on prices.