The military conflict in Ukraine continues to leave a strong mark on the grain market. The negotiations between Russia and Ukraine weighed more heavily for traders on the American stock exchange than Russia's announced ban on wheat exports to the former Soviet republics. In Paris it is the other way around. In addition, concerns about drought in the US are also increasing.
The March contract on the CBoT closed last night unchanged at $1.090 per bushel. The May contract fell 1% from Friday to $1.096,25 per bushel and the September contract fell even more, 1,5% to $1.029 per bushel. On the Matif, the May wheat contract rose from €370,75 per tonne to €378,75 per tonne yesterday. The September contract traded €1,50 higher yesterday at €325,50 per tonne. The December contract has remained unchanged. The March and May 2023 contracts yielded €0,75 and €1,50 respectively. This amounts to €2023 per tonne in May 305,25. This means that all contracts for the 2023 harvest on the Matif remain well above €300 per tonne.
Dries in the wheat belt
American grain growers on the southern prairies are becoming increasingly concerned about the ongoing drought. Much of this area has had little rain or snow since October. According to various sources, there is insufficient moisture in the soil for an average wheat yield. Growers have used fertilizer, partly due to the high wheat price, but moisture is needed so that the plant can absorb it. The coming weeks are crucial for wheat development in the southern Prairies. The harvest normally starts in this region at the end of June/beginning of July. The American Meteorological Service predicts no significant precipitation in the area for the next fourteen and thirty day period.
Several growers are therefore cautious about selling wheat at this time. The daily prices for the new harvest are good, but there must be wheat to sell. And how much wheat will be threshed is still a big question mark for many growers. The motto seems to be: it is better to wait a while before selling with the chance of lower prices during the harvest than to do business now with the risk that not all contracts can be fully delivered.
Corona is back with a vengeance
Corn and soy prices were under pressure on the CBoT. Corn fell 0,77% and soy 0,87%. Experts attribute this decline in part to a corona outbreak in China. The virus is mainly on the rise in the northeastern provinces. Due to rapidly rising infection rates, several metropolises have gone into lockdown. However, there is only limited success in getting the infections under control. This may cause Beijing to feel compelled to introduce even more restrictions. In the short term, this could mean that Chinese demand for feed grains will decline, according to some analysts. Soy is also under additional pressure due to a drop in palm oil prices. This pulls down the price of soy oil. The crush margin - the price difference between soy beans and the processing products soy oil and scrap - is therefore under pressure. That makes processors more careful when purchasing soy.