The grain market is tight. A possible strike by the American railroads therefore caused slight panic this week, especially in the American wheat market. As a result, the price has been slightly boosted. Now that the strike has been canceled for the time being, you immediately see a correction. In Europe, it is mainly the economic expectations that give direction to the grain market.
The wheat quotation on the Matif took a step back yesterday. The December contract closed €5 lower at €332,25 per tonne. On the CboT, the wheat price was under greater pressure. The December contract fell 3,1% to $8.45 a bushel. Corn and soy closed marginally lower on the American stock market.
The decline in wheat in America can largely be attributed to the railroad strike. The unions planned to stop work today (Friday, September 16). Due to the intervention of American President Biden, a strike was averted at the last minute. The White House announced yesterday that there is a preliminary agreement between the unions and the railway companies. However, traders on the grain market have taken an advance on the possible strike. It was expected that this would cause local shortages, resulting in higher prices. This has created a breath of fresh air in the wheat market in particular. Now that the strike is over, that air has to get out of the market.
On the Matif, it is mainly economic expectations that dampen the mood somewhat, according to analysts. Various signals indicate that central banks will increase interest rates further. This slows down economic growth and therefore the demand for raw materials, including grain. In addition, the availability of grain from the Black Sea region also plays a greater role in the European than American grain market. The market is still struggling with how to interpret Putin's words last week. Moderate or even poor corn yields in the EU and Ukraine provide a solid foundation for the market.
New tender
The Saudi state purchasing agency Saudi Grains Organization (Sago) yesterday launched a tender for wheat. The purchasing organization wants to acquire 535.000 tons of wheat in this tender. Drought remains a problem in Argentina. The Buenos Aires grain exchange warned yesterday (Thursday, September 15) that farmers are leaving several wheat plots as they are. The crop there is so poorly developed that it is no longer worth investing time and energy in it. The stock exchange cannot say how large that area is. The statistics do show that the area in normal or poor condition has increased from 18% last month to 34% this month. Soil moisture stocks for wheat regions increased from 29% normal or dry to 46% normal or dry. The major regions are currently experiencing the worst drought in thirty years. If the drought continues into the coming season - which is quite possible given the likely persistence of the La Niña weather phenomenon - the plans for sowing corn will be in jeopardy.