Improvements in US weather led to a correction in grain prices on the CBoT over the past trading session. The European Matif was sucked into that same sentiment. The USDA also published the Crop Progress report. The stock of winter wheat has improved compared to last week, but progress in sowing maize and soya is still well behind the five-year average.
The May contract on the Matif fell yesterday (9 May) by €8,25 to €398 per tonne. New crop contracts took a smaller step down, ranging from €2,25 to €3,00. The September contract thus amounts to €394,50 per tonne to €382,75 per tonne. On the CBoT, the July contract, which is currently the most traded, fell 1,5% to $1.092,75 per bushel. Converted that is about €380 per tonne. Soy and maize contracts also took a step back. Better weather conditions in the United States are the main reason for the correction in grain prices.
Rain in parts of the southern prairies and better conditions for spring work in the Midwest helped calm the market. The USDA now qualifies 29% of winter wheat as 'good' or 'excellent'. That is 2 percentage points more than last week and better than trade expectations. Despite this, the condition remains the worst at times for the period of the year. About 33% of winter wheat is in the ear, compared to 40% at the five-year average. The sowing of spring wheat is also lagging behind the five-year average. According to the US Department of Agriculture, 27% has been sown. The five-year average for this time of year is 47%.
Backlog
The sowing of maize and soya is also well behind the five-year average. About 22% of the maize is now in the ground, compared to a five-year average of about 50%. 5% of all sown maize is at the top. The five-year average for this period of the year is 15%. Of the planned soy acreage, 12% has been sown, compared to a five-year average of 24%.
Current grain prices include a risk premium for the weather. The premium has been reduced due to better weather conditions. Whether that is right is questioned by several experts. After all, the concerns about the drought have not disappeared. The French Ministry of Agriculture warned yesterday about the consequences of the drought on crop yields, including winter cereals. In that sense, it is remarkable that the European grain quotation follows the price movement from America.
Incidentally, the correction on the wheat price appears to be short-lived. Today, at the time of writing this article (Tuesday morning, May 10), almost all wheat contracts on the Matif in Paris and on the CBoT in Chicago are up more than 1%.