USDA manages to surprise grain market twice

The September wheat contract on the Matif closed yesterday at €341 per tonne. That is €1,50 lower than the closing price for the weekend. On the CBoT, wheat and corn, on the other hand, closed marginally higher than last week.

Grain exports from Ukraine are slowly getting underway. However, the corn from the first ship to leave under the Russia-Ukraine grain deal has been rejected by the buyer. The delivery was delayed by five months and therefore the buyer no longer wants to receive the corn. The ship is no longer en route to Tripoli but is anchored south of Turkey awaiting a port/buyer who is willing to receive the corn. Market agency IKAR increased the yield forecast for the wheat harvest in Russia from 90,5 to 95 million tons.

From export to import
India announced yesterday that it is considering scrapping the 40% import duty on wheat. Prices on the domestic market have risen sharply in recent months and the government is trying to get prices back to a more acceptable level by abolishing the import restriction. Analysts call this a remarkable move by India, which is the second largest wheat producer in the world. Shortly after the Russian attack on Ukraine in February, India announced that it would explore the possibilities of exporting more wheat to reduce the shortage on the world market. If the import tax were removed, the demand for wheat would actually increase.

Surprises
The USDA downgraded the condition of corn and soy in the US in its Crop Progress report this week. The trade was not immediately expecting a deterioration in the status of these crops after the upgrade a week earlier. 58% of the maize area is given the good or excellent status. That is 3% lower compared to the previous edition of the report. The area with poor or very poor status has increased by 2% to 16%. According to the USDA, the area of ​​soy that is good or excellent is 59%, a decrease of 1% compared to last week. In spring wheat, 64% of the area is given the status of good or excellent, a decrease of 6% compared to last week. The spring wheat harvest has started and 9% of the area has been harvested. This means that the harvest is 10% behind the five-year average. The winter wheat harvest is 86% advanced. That is 5% less than the five-year average.

Furthermore, the USDA managed to surprise the market with last week's export figures for wheat and soy. Customs figures show that more than 600.000 tons of wheat were exported. That is above trade expectations. Estimates were between 250.000 and 550.000 tons. The export of 132.000 tons of soy from the US to China and a total weekly export also exceeded trade expectations. Exports caused a small increase in prices compared to the closing price before the weekend.