After the dip last week, the quotations on the international grain exchanges are on the rise again. A pattern is emerging in the grain market. The prices show a rather sudden sharp drop. that attracts bargain hunters in no time and almost just as suddenly the price is on the rise again. The fact that the market reacts so violently is a sign of the unrest in the market. And that doesn't seem to be fundamentally changing yet.
The September wheat contract closed €6,50 higher at €312,50 per tonne on the Matif yesterday. On the CBoT, wheat closed 2,3% higher, corn rose 1,2% and soy closed 2,6% higher. On the wheat market, the increase was partly caused by bargain hunters attracted by the relatively lower price. But relatively good wheat export figures this week in the US also gave the price a boost.
Drought continues to have a grip on the grain market. Yesterday, the USDA downgraded the condition of corn and soy in the US in its Crop Progress report. 55% of the maize area is given the good or excellent status. A week earlier that was still 57%. The soy area with good or excellent status has been reduced by 1% compared to last week to 57%. Yesterday the European Commission also released the Mars bulletin. The yield forecasts for corn, sunflowers and soy have been significantly adjusted downwards. The EU's yield expectations will be particularly affected by trade this season. This is due to the problems in Ukraine. The importance of the EU's grain exports on the world market has therefore increased.
Additional measures in China
China is also experiencing drought. The drought is a serious threat to autumn crops, the Chinese Ministry of Agriculture said in a statement today. Everything possible must be done to improve water availability, according to the ministry. Local authorities are being called for flexibility in plans to cope with the drought. According to the ministry, additional silver iodide arrows should be used to artificially generate showers and, where possible, pumps and machines should be used to get water from the sources to the dry regions. Areas where the drought has already caused significant damage to crops are being called upon to resow those crops.
Egypt expects to be able to import wheat from India, a minister said yesterday. Egypt is one of the largest wheat importers in the world and is therefore largely dependent on supplies from the Black Sea region. Egypt wants to reduce that dependency and is looking for other suppliers. India is the second largest wheat producer, but has so far barely gained a foothold in the global market. Shortly after the Russian attack on Ukraine, India announced that it would change this and wanted to fill the gap left by the loss of grain from the Black Sea region. An extreme heat wave in India threw a spanner in the works and the Indian government's priority became securing its own food supply. With an export ban, international ambitions seemed to be on the way. It is all the more remarkable that Egypt announced yesterday that it had purchased 180.000 tons of grain in June for $400 per ton. The grain has not yet been loaded, the minister added.