Despite the fact that the Euronext futures market for wheat is trading lower, sentiment for the European grain market remains positive. Among other things, a favorable exchange rate for the euro helps in this regard. How long will it take before the 300 euros is back in the picture? For large price increases, we can currently also look to rapeseed, which continues to increase in price.
On Monday afternoon, November 15, the December contract is trading at around €295 per tonne. About €2 lower compared to the close on Friday afternoon. The high in the market was €297 this day. This means that the level of €300, which was briefly touched last week, is slightly further away. This means that this level – the first resistance – is certainly not out of the picture.
New buyers
It was not so much the American figures from the Wasde report, but mainly the new export measures announced by Russia that have ensured that European grains are more firmly in the saddle. A favorable exchange rate for the euro compared to the dollar or ruble helps with this. Algeria joins the queue of buyers for wheat, despite current prices. Egypt preceded them earlier. This also ensures that the level of physical prices continues to rise. By relaxing the quality requirements slightly, wheat from the Black Sea region has a better chance. Looking at the latest results, Russia and Ukraine still have a (slim) price advantage compared to Romania or France.
The bulls on the futures market must first look for news in order to put a new increase on the board. The December contract expires early next month, meaning the price is influenced by technical trading. Stock exchange participants with a position must choose what can cause a short-term price spike (short squeeze). We have seen this before in oilseed rape.
Oilseed rape remains positive
Speaking of this crop, the Euronext listing remains positive. The February contract now stands at almost €715 per tonne and that is a record. The most recent increases are driven by the Canadian market and the large shortages there. Rapeseed King Canada even has to import product from Ukraine to have sufficient raw materials next year.
Grain maize also posted higher figures for the January contract in Paris. On Monday afternoon the price is trading around €245 per tonne. A slow corn harvest in Europe ensures that the price floor remains stable. Drying is always a requirement for harvesting corn in relatively wet Europe. High gas prices make this difficult and increase costs. In France, just under 20% of grain maize still needs to be combined, the Ministry of Agriculture reports.
American markets
Despite the fact that the latest Wasde report did not particularly support maize with figures, the American market still managed to rise considerably, mainly finding support in the CBoT wheat quotation. It reached the level of $300 per tonne last week and will rise again on Monday. Moreover, farmers in the US are choosing to sow less corn next season. More winter wheat has been sown, but especially more soy will go into the ground next spring, that is the current forecast. This has everything to do with the high costs of nitrogen. An input that corn absolutely cannot do without.
The European wheat market is building on a solid foundation, with new increases for wheat also possible in the coming days. If more becomes clear about Russian export barriers - and especially their magnitude - this could give the market a new impetus. In the meantime, winter grains in the EU are growing well on average and the conditions are reasonable to good.
Precipitation in Southern Hemisphere
Rain in Australia causes hitches in the harvest and export train. In the meantime, analysts and traders are keeping a close eye on the growing season in Argentina. Sufficient rain there – as a result of the La Nina weather effect – ensures positive harvest expectations. This is estimated to benefit African wheat buyers early next year when wheat from the EU and Russia sells out.