The grain market showed a mixed picture in the last trading session. In Paris, wheat prices rose to its highest point for over a month, while in Chicago wheat closed lower for the third day in a row. Is that a sign that the market is starting to overheat?
On the CboT, wheat prices closed at $1.068 per bushel, approximately €363 per tonne). That is almost 2% lower than yesterday at 4,6% below Monday's closing price. Profit-taking by speculators is one of the main causes for the decline in wheat prices on the CBoT. In addition, the somewhat disappointing export figures also play a role. Corn also lost on the CBoT, closing 2% lower at $799,25 per bushel (approximately €291 per tonne). The rise in soy also continued yesterday - albeit cautiously - on the CboT.
The picture is different on the Matif. The May wheat contract closed yesterday at €405,75 per tonne. That is €7,25 above the closing price the day before and the highest price since March 7. Expectations for the wheat market in the EU were previously tempered by moderate export expectations and, for example, the news that Egypt has approved India as a potential supplier. Moderate export results from wheat exports from Ukraine and Russia turned the mood yesterday, according to some analysts.
Opposite movement
A point of attention in the current revival is that the contracts for the new harvest are not increasing. In fact, those valleys. The fact that the price of the May 2022 contract is increasing may be due to the date on which the contract expires. Traders who use the futures market to hedge the price risk they run on wheat that has to be purchased or sold are reducing their positions. Because there are fewer transactions, the market becomes more sensitive to price movements and volatility increases, which attracts speculators. On the CBoT there are strict rules to prevent extreme price movements. On the Matif it is a bit smoother. This is a risk for traders or other market players who have open positions. It has happened before that the market suddenly started making strange jumps before the contract expired. The fact that the current contract is out of step with the next one could be an early indicator of this.