Analysis Grains & Commodities
Is drought taking hold on the grain market?
The wheat listing on the CBoT has taken a step back. This time not because of developments in Ukraine, but because of the Wasde report that the US Department of Agriculture (USDA) published early in the evening. The wheat price on the Matif has been remarkably stable for a week.
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Choose the subscription that suits youThe May wheat contract closed on Thursday, April 7, at €363,75 per tonne. That is €0,25 lower than one day earlier. It is striking that contracts for the new harvest are steadily increasing. The September contract closed €3 higher at €346,25 per tonne. The May 2023 contract amounts to €335,25 per tonne, or a plus of €2 per tonne. On the CBoT, the wheat quotation lost 1,8% compared to the previous closing price. Corn and soy were on the rise in the United States.
Market agency StoneX reported yesterday that it expects the Brazilian wheat area to grow by more than 20%. This means that the country's harvest (if everything goes normally) will pass 10 million tons, a record for Brazil. Furthermore, the Wasde report is eagerly awaited. Traders and speculators have already pre-sorted there to some extent.
Drought
In addition to the war in Ukraine, drought is an increasingly dominant factor. The rain previously forecast in drought-stricken regions was insufficient to solve problems. In the southern Great Plains - one of the most important wheat regions in the United States - it is still dry, according to the US Drought Monitor. In South America, the expected soy yields have been adjusted downwards. A lack of precipitation also plays an important role here. That cost more than analysts previously expected.
