After a fall in wheat and maize prices, the prices are green again today (Monday, April 4). The price of grain maize in particular will have to deal with a positive correction. US figures show a smaller area of maize than previously expected. Together with a considerably smaller Ukrainian harvest, this will have major consequences for the feed market next season.
At 15.30:7,50 PM on Monday afternoon, the June contract for grain corn on the Matif is up €323 per tonne at €315,50 per tonne. The price closed at €10 on Friday afternoon. The lowest price since Tuesday. Corn prices in Chicago also fell on Friday. Here too, a plus of about $XNUMX is recorded on Monday afternoon. More demand for corn from China is helping the American market recover.
Wheat in the plus
For wheat, the price also rose $25 on the CBoT and €2,75 per tonne on the Matif to €368 for the May contract. The new harvest (September) now stands at €334,50 per tonne. Corn provides an important base, also in the wheat market. Published last week Numbers from the USDA Department of Agriculture that are important for the market regarding current American grain stocks and area expectations for next year.
The USDA estimates that the country's corn corn acreage will grow to 36,22 million hectares this year. However, traders expected an area that was almost 10 million hectares higher. That's a clear one bullish signal. Initially, this was not taken seriously by the market, at least not in the long term. The current stock of 199 million tonnes as of March 1 was slightly less than traders expected. The wheat supply actually turned out to be very tight.
Smaller Ukrainian corn harvest
Despite the war, Ukraine was able to export 1,1 million tons of corn in March – mainly by rail. That is only a quarter of the usual level. New analyst estimates put a corn area of 3,95 million hectares in the country this year. That was almost 5,5 million hectares last year. A ceasefire is expected within a few weeks. The chance of this is becoming smaller and the market is also picking up on that signal.
Sticking to this figure, Ukrainian corn production theoretically amounts to 26,6 million tons. That is 36% less than a year earlier. If sufficient or timely fertilization cannot be provided, this figure drops even further to 21,6 million tons. Work is currently being done at Ukrainian companies. Especially in the west of the country where there is little or no fighting. Yet it is difficult to find staff. Tractor drivers are at the front, diesel goes to the army and fertilizer is not available.
Potentially less corn from US
Ukraine and the US together control almost half of global corn exports. In the US it has been very dry all winter and also at the beginning of spring. This hinders the sowing of maize. With an average harvest, the corn yield is 355,5 million tons. That is an increase of 7% compared to last year. The question is whether that yield will be achieved in these weather conditions and moisture shortages.
With a smaller harvest in South America and a high-priced fuel market, the bottom is solid for corn prices. Both industries can switch from grain, although this does not mean that it will become much cheaper. Wheat and certainly barley are alternatives that the feed market is looking at.
Rapeseed remains expensive
Another raw material for the animal feed market is vegetable oils, flour and residual products such as rapeseed. These are already highly priced and will remain so for the longer term. Analysts initially expected one month of supply problems from Ukraine. Now it is clear that this will be much longer. The country is trying to export raw materials via railway lines and also the Romanian port of Constanta in the Black Sea. In the meantime, more and more reports are emerging that the Russian occupier is deliberately carrying out attacks on grain terminals and export locations in, among other places, the port city of Odessa.
Market agency Strategy Grains has reduced EU imports of sunflower meal for animal feed from Ukraine by 400.000 tonnes for this season. The EU's import of sunflowers, 90% of which comes from Ukraine, has been reduced by 800.000 tons. One consequence is that more sunflowers will be sown in Europe this season. It also increases the demand for rapeseed and rapeseed products such as oil and scrap.
Late spring?
The war in Ukraine continues to occupy the grain market to a large extent. When the battle flares up, the prices react immediately. Conversely, if there is a glimmer of hope in the peace negotiations, the price will immediately fall. What is rarely heard is a change in the weather in Europe. It remains dry in most European countries at the beginning of April, but the temperature has dropped significantly. Record low temperatures were reached in France and Germany, among others. This puts a brake on crop development, which started smoothly in March. Crops such as rapeseed started flowering early and are now experiencing problems from the cold. For the time being, April continues to be very different from March. This could ultimately make spring 2022 a late one, with adverse consequences for crop development.