Analysis Grains & Commodities
Has the wheat quotation bottomed out?
Wheat prices on the Matif and the CBoT showed some tentative signs of recovery yesterday after the steep declines earlier this week. The possible opening of ports in the Black Sea remains one of the major uncertainties in the market. In addition, the growing conditions do not always contribute to a good harvest.
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Choose the subscription that suits youOn the Matif, the September wheat contract closed at €382,50 per tonne. That is €2 higher than the day before. All contracts on the Matif for the 2022 harvest are now above €370 per tonne again. On the CBoT, the wheat quotation was even more strongly on the rise. The July wheat contract rose 1,6% from the previous day to $10.58,25 per bushel (approximately €361 per tonne). The wheat quotation on the CBoT is therefore 8% lower compared to the start of the week. Corn has also taken a step back on the CBoT this week, although the decline is smaller than for wheat. Only the soy price has hardly responded to the news surrounding Ukraine.
According to analysts, market players have overly optimistically assessed the likelihood that ports in Ukraine will open in the short term. Sources within the United Nations have said that they have had constructive discussions in Moscow about the transport of grain and fertilizer through the ports on the Black Sea. However, Putin's demand that Western sanctions on Russia be relaxed in exchange for grain exports is not sitting well with several world leaders.
Shrinkage in area
In Argentina, 2022 hectares less wheat will be grown in the 2023/100.000 season compared to the previous estimate of the Argentine grain exchange Bolsa de Cereales, the organization announced yesterday. This brings the total wheat area to 6,5 million hectares. The fair cites the dry weather in the north of Argentina as the reason for the smaller area. No significant precipitation is forecast there for the short term. Bolsa de Cereales previously mentioned high fertilizer prices and rising cultivation costs as factors that have a negative impact on the wheat area.
Problems with drought in Argentina are also visible in Geoglam's Crop Monitor, a new update of which was published yesterday. The crop status has deteriorated, especially in North and South America. In Brazil, for example, growing conditions have been downgraded from exceptional to watch. On the southern prairies of the US, the status of wheat has been downgraded to poor and the crops on the northern prairies of the US and in Canada - where the season has just started - have already been downgraded watch. In Europe, it is notable that the classification of wheat in Turkey has been upgraded to favorable.
