Again the driving factor on the grain market

The September wheat contract on the Matif has been moving mainly sideways for a number of days now. That didn't change yesterday. Wheat closed at €340,25 per tonne, down €0,75 from the day before. On the CBoT, wheat closed 0,2% higher. Corn rose 1,1% on the American stock market. Soy was the biggest gainer. The September contract recorded a plus of 3,1%.

The wheat harvest in Europe has largely been completed. The preliminary yield figures show large differences between the countries. It is difficult for analysts to estimate what the total EU harvest will amount to. Developments in Ukraine are also a major uncertain factor, which weighs more heavily on the European market than in the US. Due to its geographical location, the Black Sea region is an important competitor for European exporters. These uncertainties cause the European wheat price to move mainly sideways. The market needs an impulse to choose a direction.

Control
US stock market players are still under the spell of the USDA's surprising Crop Progress report. The condition of spring wheat, corn and soy was downgraded more sharply on Monday than the market had expected. Later this week (Friday) the USDA will release the monthly Wasde report. Traders and speculators are taking their positions in the run-up to this. The USDA gave a clear bullish signal with the Crop Progress report and if you follow the price development on the CBoT in recent days, the market is sorting for the Wasde report to also contain bullish news.

In addition to the ministry's guidance, weather reports are also closely followed by corn and soy traders. Some rain has fallen in parts of the Midwest in recent days, but forecasts call for warm and dry weather in the coming days. Drought is not only a problem in North America. Crops in parts of South America and Europe are also suffering from drought. Africa is rarely mentioned in this context. Morocco announced earlier this week that wheat yields have been decimated due to a lack of rainfall. Moderate yields are also expected in other North African countries, according to the Geoglam Crop Monitor.

In parts of East Africa the situation is not much better. That could still cause surprises in grain exports. Several African countries are already largely dependent on grain imports and if local harvests are disappointing, they have to enter the world market even more. The big question is whether these countries can and want to pay the relatively high prices of the moment. Given recent developments, where demand for wheat increased sharply when the wheat price rose towards €330 per tonne, it certainly seems that way.