Grain quotes have been under pressure over the past trading session. Strikingly enough, the reason for this is to a large extent to be found outside the grain market. The foundations of the grain market remain solid, according to various experts.
The wheat quote on the Matif closed marginally lower at €3,50 yesterday at €328,75 per tonne. As a result, the wheat price on the European stock market continues to move mainly sideways. The grains had to give up more at the CBoT. Wheat closed more than 4% lower on the CBoT compared to a day earlier. Quotations of maize and soy both fell by 2,3%.
The American grain market is being sucked into a broader development in the economy. Concerns about slowing economic growth, inflation and interest rate hikes are mounting. This is seen as unfavorable and in addition to falling share prices, commodities have also lost their coat. American grain exports are further hindered by the relatively expensive dollar. Grain from the US is therefore relatively expensive on the world market.
The fundamentals in the grain market remain relatively solid, according to analysts. The corn and soybean harvest in the northern hemisphere is about to really explode. The preliminary yield forecasts show that the yields in both the US and the EU are not easy. The developments in Ukraine also do not point to the sudden availability of a lot of grain. Although exports are getting back on track with the grain deal, exports are still far behind exports before the Russian attack in February. The Ministry of Agriculture announced yesterday that it expects 12 million tons of regular storage capacity to arrive by the end of November. According to other sources, wheat acreage in Ukraine could be reduced by 30% to 40% due to lack of financial resources. The total wheat harvest would therefore not exceed 15 million tons at the most. For comparison, Ukraine threshed 19 million tons this season and in 2021 the harvest amounted to 32,2 million tons.
Drought and frost in Argentina
In Argentina, wheat, which is currently in an important phase of the growing season, is due for rain, the Buenos Aires grain exchange reported in the market update. It has been dry for months in the important growing areas in the country and the stock of moisture in the soil is being depleted. This may change in the first half of September. Some weather models predict some precipitation in this period. Argentina is a major exporter of wheat on the world market. Argentine farmers have sowed 6,1 million tons of wheat this season. That is less than last season when wheat was grown on 6,7 million hectares. This season, the wheat in the north of the country is in bad shape, according to the Buenos Aires grain exchange. 66% of the acreage has a fair or poor status. The stress in the crop due to moisture deficiency was further exacerbated by periods of rising temperatures that were alternated by periods of frost.