Grain prices have taken a step back. There seems to be a correction mainly after the days when prices were on the rise. For both the short and the longer term, there are several indicators that point to a hard bottom in the grain market.
Quotations on the grain exchanges took a step back in the past trading session. The September wheat contract on the Matif yesterday closed €5,75 lower at €330,25 per tonne. The price band for the other contracts for the 2022 harvest is remarkably narrow. The December contract closed at €322,75 and that will decrease to €322 per tonne for the May 2023 contract. On the CBoT, wheat closed 2,6% lower, corn was down 0,6% and soy was down 1,4%.
The correction on grain prices is largely attributed by various experts to general economic developments. Inflation and interest rate hikes implemented by the US and EU central banks are keeping the financial markets busy and the grain market is also benefiting from this. A correction after the rise of the last few days does not indicate a break in the trend. The grain market is tight. Wheat yields are generally not great, although there are large regional differences. Maize and soya are maturing and according to Pro Farmer's tests, these crops are also not achieving top yields. Players in the market are struggling how to price these relatively lower yields in.
Physical Market
It is striking that no maize, soybean and soy meal contracts for September have been registered for physical delivery on Monday evening. Reuters announced this on the basis of data from the CBoT. The commercial companies have one more day to register their contracts. Parties with a sell position can make it clear during this period that they intend to actually deliver the underlying asset under the futures market contract. Parties with the oldest purchase contracts are obliged to accept that delivery. A small number of physical delivery contracts are seen by traders as a sign that prices are likely to rise in the near term. Grain on the physical market is then worth more than according to the quotation on the futures market.
The World Meteorological Organization announced today that the weather pattern of La Niña is likely to continue through the end of the year. It is the first time this century that the weather pattern has lasted three consecutive winters in the Northern Hemisphere. La Niña causes above-average precipitation in parts of Asia and Australia and drought in South America and the Horn of Africa. Argentina harvested 2021 million tons of soy in the 2022/44 season, government figures show. Last season the yield was 46 million tons. According to Argentina, the lower yield is due to drought last season.