The most active wheat supply contract – the one for September 2022 – fell by €24 to €15,50 per tonne on Tuesday, May 410,50. The decrease is therefore slightly smaller than a week earlier, but still substantial. Can a bottom of €400 be maintained or is that too much, now that precipitation gives the crops a much-needed boost?
Last week the price already fell €17,50 per tonne after reaching a peak of €438,25 per tonne in the first two days. That was an absolute record. Initially, the price recovered on Monday to €426 per tonne. On Tuesday morning the Matif still showed green numbers, but in the afternoon it suddenly fell sharply. Ultimately, the September contract was depreciated by €15,50.
Sowing corn is progressing quickly
The image on the CBoT in the United States shows a similar picture. The price fell $14,23 per tonne yesterday to $424,21 for July delivery. What mainly concerns the American market is the weekly 'planting progress report'. Figures that the USDA Department of Agriculture compiles weekly for the country. At the end of last week the counter stood at 72% for corn and 50% for soybeans. This means that corn sowing remains well behind the average, but the pace is not as slow as in 2019. Given the current circumstances, the sowing season still has two weeks to go. This means that most grain maize can be sown without major yield loss.
There is no longer a major recovery for winter wheat in the US. The crop scores remain virtually unchanged for this week. Rainfall in the main wheat region - expected this week - could help some crops, but in the south the rain comes too late. The harvest has already been going on there for several days.
French wheat remains bad
Despite the rainfall in Europe, FranceArgiMer has again lowered the crop scores for France. 73% of winter wheat is now in good condition. That is five percentage points less than last year. Nevertheless, the country, and especially the dry north, experienced significant local rain showers at the beginning of this week. That is also the reason why the price fell so much on Tuesday. Elsewhere in Europe, more precipitation has fallen and grains and other crops can benefit from this.
War or no war, the weather currently remains the most important ingredient that controls the wheat price. The forecast for the next seven days until June 400 shows some precipitation again, but not for France. This could have an effect on the Matif if the main wheat exporter in the EU sees its crops deteriorate, thereby also putting a floor above €XNUMX on the Matif.
China wants to get corn from Brazil
In the US, corn prices also took a big dip. The biggest price drop on the Matif was already taken a week earlier. On Tuesday, the Chinese and Brazilian governments announced that they are working on a trade agreement to export corn from Brazil to China. The country normally buys most of its corn from the US and Ukraine. The Americans see this as a major threat and it has a major effect on long-term expectations. Brazil has previously taken a large part of the Chinese soy trade and now fears that this will also happen to corn.