Grain prices on the international stock exchanges were under heavy pressure during the past trading session. The weather plays a part in this. Only a broader trend was visible. Not only the grain market was hit. Crude oil and the stock markets have also left a significant spring.
The price of the September wheat contract on the Matif fell to €331,75 per tonne. That is €12,50 lower than the day before. On the CBoT, the wheat price fell more than 4% to $7.93,75 per bushel. Soy fell 3% on the US stock market and corn lost 2,5%.
Rain in the Midwest of the US is boosting the potential yields of corn and soybean in this key growing area. The corn and the US are also doing quite well, according to the USDA Crop Progress report published yesterday. 64% of the acreage is classified as good or excellent and 9% bad or very bad. That is equal to the five-year average. The picture for soy is mixed. 63% is good or excellent and 9% is bad or very bad. The winter wheat harvest in the US is now over half. 54% of the acreage is indoors. The five-year average for this time stands at 48%. The preliminary acreage figures from Canada have also been published. The wheat acreage there has grown to the largest area in nine years.
Recession
The decline in the grain market is attributed by analysts not so much to developments in the market itself, but to widespread investor fear of a recession. The Bank of England commented yesterday that 'the economic outlook for the UK and globally has deteriorated significantly'. “After the illegal invasion of Ukraine, global inflationary pressures have risen sharply. This largely reflects sharp increases in energy and other commodity prices that have exacerbated inflationary pressures caused by the pandemic, and further disruption of supply chains. households and the profit margins of some companies have fallen as a result."
In short, it means that the demand for raw materials can decrease and companies can find themselves in dire straits. As a result, the last trading session saw a wave of liquidations in positions by investors and speculators in the grain market, oil and stock markets. According to analysts, cash is seen as a safer haven than holding positions in, for example, commodities.