There are quite conflicting signals coming out on the grain market. Earlier this week, the USDA Department of Agriculture predicted that the demand for grain will decline, partly due to the relatively high prices. On the other hand, the weather in different growing regions does not exactly contribute to top yields. These conflicting signals can also be seen in the price formation on the international exchanges.
The wheat price on the Matif rose yesterday by €2,50 to €344,25 per tonne. On the CBoT, the wheat quotation actually showed a marginal decline. Corn and soy, on the other hand, showed a small increase. The September corn contract rose 1% to $6.00 per bushel (approximately €236 per tonne). The September soy contract rose 0,5% to $13.70,25 per bushel (approximately €502 per tonne).
Falling demand for grain and drought in key growing regions in the US and Latin America are competing as decisive factors in the grain market. The Argentinian Rosario Grain Exchange (BCR) yesterday (Wednesday, July 13) sharply revised its wheat harvest forecast downwards. According to BCR, the wheat harvest for the 2022/2023 season amounts to 17,7 million tons. That is a decrease of 0,8 million tons compared to the previous harvest forecast. The smaller harvest is largely the result of a smaller wheat area.
Most wheat in Argentina is sown in May, when the country was experiencing drought. As a result, less wheat was sown than BCR previously assumed. The first forecast for the season included an expected area of 6,6 million hectares. In June this was adjusted to 6,2 million hectares and in the July forecast the area was reduced again to 5,9 million hectares. For maize, BCR's yield forecast for the 2021/2022 season has been increased from 49,2 to 51 million tonnes. About 85% of the sown maize area has now been harvested.
In the US it is also the drought that is keeping the market busy. The weather has less influence on the wheat price, but corn and soy are in full growth. The warm and dry weather forecast for the Midwest comes at an unfortunate time for corn as the crop comes into flower.
grain export
The export of French wheat to destinations outside the EU has started strongly, according to data from market agency FranceAgriMer published yesterday. The first export estimate for the new season puts exports at 10,3 million tons of wheat. This means that exports for the current season are 17% above last season's exports. France is therefore heading for the largest export since the 2019/2020 season.
Turkish Defense Minister Hulusi Akar reported yesterday that an agreement is between Russia, Ukraine and the UN on resuming grain exports through the Black Sea ports. Negotiations have been going on for some time and an agreement often seemed almost complete. Among traders and analysts the mood is 'seeing is believing'. The influence on the market appears to remain limited for the time being.