The mood on the European and American grain exchanges differs. In Europe, the wheat quotation is slowing down, while the rise in the US continues. Furthermore, it is the yield expectations for maize and soy that keep people busy. In the US, the USDA appears to be over-optimistic and Brazil released surprising data on its corn and soy crop yesterday.
The grain market sent out several signals over the past trading session. Wheat was under some pressure on the Matif, closing €3 lower at €329,25 per tonne. On the CBoT, the line was held up and the September wheat contract closed 1,6% higher. Corn was also on the rise in America, up 1,2%, while soy took a step back and closed 0,4% lower.
Players in the US wheat market are especially captivated by the export opportunities for the US. The harvest in China seems to be disappointing and that offers opportunities for grain exports, or so is the prevailing view. European trade is more focused on North Africa and the Middle East. Countries in these areas normally get a large part of their wheat from the Black Sea region. This has shifted somewhat to the EU due to the war in Ukraine, but the large harvest in Russia offers stiff competition. Russia is having trouble exporting that wheat and is offering the grain at considerable discounts to allies in the traditional sales regions.
Surprise from Brazil
Corn's upward momentum on the CBoT was reinforced by the Pro Farmer Midwest Crop Tour yesterday. In western Iowa, Illinois, Indiana and Nebraska, trial yields are lower than last year and below the USDA's yield forecast for this season. Illinois is the only state where Crop Tour yields still exceed the three-year average. The expected yield of soy is also lower in these states compared to last year.
Still, the soybean quote took a step back. Analysts point to the price rally of the past few days. The price has taken a big step and speculators have now cashed in on the price gain. But that is partly due to news from Brazil. The Brazilian statistical office Conab announced yesterday (Wednesday, August 24) that it expects to harvest a record amount of soy in the coming season. The total harvest is estimated at 150,36 tons. That is 21% more than last season. The acreage has grown by 3,54%, but the big increase is mainly due to higher yields per hectare. Last season, the country had to deal with drought, which severely cut yields. For the coming season, Conab does not expect another dry year and the agency is therefore counting on higher yields.
Conab is also optimistic in the forecast for maize. The agency assumes a harvest of 125,5 million tons. "Despite the increased production costs, the crops still have a positive cash flow and are profitable for the Brazilian farmer," Guilherme Ribeiro, director of Conab, writes in the explanation of the figures. "The climate is the big uncertain factor in this."