Wheat prices on both the Matif and CBoT have reached their lowest level since March 1. This partly fits into the seasonal pattern. During the harvest, the market is usually at its lowest point. But the market is also shaking off concerns about supply problems from the Black Sea. There are also doubts about economic growth.
The September contract on the Matif closed yesterday at €359 per tonne. That is a loss of €11,50 compared to the closing price the day before. The wheat price on the CBoT made a similar move, losing more than 4% in the last trading session.
Analysts say the progress of the wheat harvest, especially in the US, is putting heavy pressure on the market. As a result, more wheat becomes available and, at least temporarily, attention for the problems in the Black Sea decreases somewhat. Remarkably, hardly any actual realized revenue figures are released. The Crop Progress report has reported weekly on the moderate to poor condition of winter wheat and various market agencies have predicted yields below the multi-year average. At the beginning of this month, the USDA wrote that it expected a 7% lower yield compared to last year. The USDA will provide a new update next week. However, market agencies and analysts are still very cautious about making statements about the harvest, even though a quarter of the winter wheat in the US has already been threshed.
Recession
In addition to supply, the price is determined by demand. A number of questions arise among traders about how the demand for wheat will develop in the near future. The war in Ukraine has further stimulated the commodity markets after the corona crisis, with large price increases almost across the board. The market has blown up as a result. The second half of May was clearly deflated after the record peak of €438,28 on May 16.
As of this week, a new round of downtrend has entered the market. This time the cause is not a record price, which has traders wondering whether the market might be inflated. Investors are increasingly starting to wonder whether we are heading for a recession. That could put a brake on demand for raw materials, including grain. The market, which is already in a seasonal slump, is being pushed down even further by the changing mood.