On Wednesday and especially Thursday, the bottom of the European wheat market was tested quite a bit. On the Matif futures market in Paris, the price fell to a few euros below the €400 per tonne level. However, the price eventually closed higher.
The weather conditions in Europe in particular play an important role in providing direction. A widespread rain front in Europe brings relief to many crops. Particular attention was paid to France, where the drought is most acute. There were showers here, but not enough.
Wheat remains above the €400 bottom
On Wednesday, the Matif closed at €404,50 per tonne for the September contract. On Ascension Day - not a national holiday in France - another €5 per tonne was added, after the contract consistently traded a few euros below the €400 level during the day. On the CBoT, a new reduction could not be avoided. The price closed there on Thursday at $419,61 for the July contract.
Maize also shows a significant depreciation due to disappointing exports, export expectations for the coming season and the sowing that is now going smoothly. The bottom has been reached on the Matif and the price also rose again on Thursday. This closed at €351,25. Incidentally, the soy price in the US is on a new rally.
Grain export corridor
The December contract on the Matif is also still above 402,75 at €400. The March contract is just one euro below that. September 2023 closed yesterday at €340,25, down almost €30 from the peak on May 22. It shows that people look at the very long term (slightly) differently. Especially now that Russia is talking to Turkey and the West about setting up grain exports corridor. This will not only ensure that the current stocks can be exported. The conversations mainly focus on next season.
The American wheat price in particular fell after this news became known on Wednesday and took shape on Thursday. But it all still has to happen. Previous humanitarian corridors often faced many challenges. Free movement for the export of grains is also important for Russia. The country is partly dependent on the Black Sea ports in Ukraine. Simply opening a route will not help exports. Shipping facilities must be restored and shipowners must be willing to send ships to the country at all. Something that isn't happening now.
Downward trend?
News from Ukraine therefore continues to partly dominate the prices, in addition to the weather in the EU and US. Moderate weather and regular showers soften yield expectations in the EU and partly also in the US. The question is therefore whether the €400 price level is realistic. As a rule, the price always drops towards harvest time and this market law also applies this season. Only when the harvest is in and it is clear what the actual yield is and what the quality is, will the market choose a new direction.