The grain market has taken a big step up in the past trading session. Lower yield expectations for maize and soy are the driving force behind this. In their wake, the wheat quotation is also being pulled up.
The September wheat contract on the Matif closed yesterday at €332,25 per tonne. That is an increase of 3,5% or €11,25 compared to the day before. The largest price increase in the last trading session was in corn on the CBoT. The price rose by 4,2%. Soy and wheat were also on the rise on the American stock market. The September soy contract rose 2,6% and wheat 1,6% compared to the day before.
Concerns about the expected corn harvest in the US. The USDA lowered the rating of corn and soy earlier this week. The Pro Farmer Midwest Crop Tour is fueling rumors that the USDA is overly optimistic about its yield forecast. In South Dakota, Ohio, Indiana and Nebraska, tour revenues are below last year's. In two of the four states, the yield is below the three-year average and in South Dakota the yield in the tour is even the lowest since 2012. The figures for the important corn states of Illinois and Iowa will be announced later this week.
A very good US crop would be welcome to help ease the tight grain market. The USDA has been quite positive in its yield projections so far. According to some analysts, the effect of the high temperatures and the lack of precipitation have not been sufficiently taken into account. The market is therefore eagerly awaiting the results from Illinois and Iowa as important growing areas for both corn and soy. These can drastically change the overall picture in the yield forecast.
Corn is also the uncertain factor in Germany
The German winter wheat harvest has been adjusted upwards by 800.000 tons compared to last year to 21,8 million tons by the German farmers' association DBV. The total German grain harvest is estimated to be almost 2% higher at 43 million tons. The total harvest is therefore considerably below the multi-year average, which (without the extremely dry year 2018) is 45,6 million tons. The major uncertain factor is the grain maize according to DBV. Corn has suffered greatly in recent weeks from drought in the main growing areas.
In the wheat market there is a striking difference between the CBoT and the Matif. The wheat contracts on the Matif are declining in small steps. September 2022 closed yesterday at €332,25 and that decreases in steps to €302 for the May 2024 contract. The wheat contracts on the CBoT show a contrary picture. Prices are rising there. September 2022 is at $7.82,75 per bushel and that increases to $2022 per bushel for the 8.27,50 wheat harvest. For wheat from the 2023 crop, the price is even slightly higher with March 2024 at $8.46,75 per bushel as the highest contract. American trade therefore appears to be preparing for a structurally tight wheat market with ditto prices, while in Europe relief on the market is more expected.