European and US wheat prices have been out of sync over the past trading session. On the CBoT, the price showed a slight correction while the Matif has been holding the uptrend firmly for a week now.
The May contract on the CBoT fell 0,3% to $1080 per bushel. The July contract also closed lower, but remains well above the current contract at $1091,25 per bushel. On the Matif, the May wheat contract rose to €418,25 per tonne. That is a plus of €3 compared to the close the day before. The contracts for the new harvest showed even slightly larger increases. The September contract added €3,75, December €4 and March and April €4,50. This brings the September contract to €378,25 per tonne and decreases to €366,50 per tonne for the May 2023 contract.
Speculators are cited as the reason for the fall in the wheat price on the CBoT, who took profits after Tuesday's rebound. In Europe, the developments in the war in Ukraine are putting more pressure on the market. Russia fired two missiles at a strategic bridge near Odessa yesterday. The bridge over the Dniester Estuary is part of the only railway route fully owned by Ukraine to the ports on the Danube. Due to the blockade of the ports on the Black Sea, Ukraine is looking for other routes to export grain. The railway to the ports on the Danube was one of the alternatives that, according to the Ukrainian government, has great potential. “The railway route, of course, suffered from the Russian attack,” Roma Rusakov, spokesman for the Ukrainian ministry of agriculture, told Reuters. "The effect is that 150 fewer wagon loads or more of grain and iron can be transported per day."
Gap between old and new harvest
On the Matif there is a considerable gap at €40 between the contracts for the old and new harvest. The expiration date for the last contract of the old harvest is approaching. This usually means that the contracts move towards each other. The big question, according to analysts, is whether the old crop is overvalued or the new crop is undervalued. There are arguments for both.
It is of course still very early to make statements about the European wheat harvest. The Mars bulletin with crop conditions earlier this week gave a fairly optimistic picture of wheat in large parts of Europe. In addition, there is also air in the market due to speculators who are attracted by, for example, the intense price fluctuations on the grain market. Looking at that, a correction to the price could be logical. On the other hand, the world's supply of wheat is relatively small. In addition, the growing season is very dry in parts of the US, China has stopped issuing wheat from strategic reserves earlier than last year and high fertilizer prices and availability problems are hampering yield potential.