Despite the fact that the US CBoT and European Matif both opened higher than Friday's closing price, expectations were somewhat dampened on Monday afternoon. Quarterly figures from the European Ministry of Agriculture USDA change little in the situation for wheat. In Europe it is mainly the situation in Ukraine that is on the minds. The longer term also plays a role in this.
The December contract on the Matif initially opened higher at €360 per tonne after closing at €356,75 on Friday afternoon. On Monday afternoon, while writing this article, the price dropped to €351,75. This means that the level is still significantly higher than in the past three months.
Impact of USDA figures small
Prices also rose 1% in Chicago on Monday morning, but then fell again. On Friday, the USDA released their quarterly inventory report for wheat, corn and soybeans. The wheat figures are in line with what analysts and traders expected. So that wasn't much of a surprise. The tight situation with grain maize in particular ensured that the market continued to grow.
Due to drought in the winter wheat areas of the US, the market is moving only minimally. The relationship between dry sowing and the final price level is very small, so traders are not yet concerned. In Europe, the conditions for sowing after rainfall at the end of September are very good. In Russia it is exceptionally wet, making the sown area the smallest since 2013.
Black Sea concerns
There are still major concerns surrounding the export of grain from the Black Sea region. Nearly 6 million tons have now been exported, mainly corn, and the current agreement with Russia still has 48 days to run. Analysts are very cautious about what will happen in November once that period ends. The current situation offers little hope that President Putin will sign a new deal. Also the Russian one grain export is anything but smooth and the country needs that to be able to sell a record harvest.
The wheat market remains in the grip of shortage worldwide. Global wheat supplies are estimated to decline by 10 million tonnes in 2022-2023. The opening stocks this season are the smallest since the 2017-2018 season and the ending stock is estimated to be the lowest since the 2016-2017 season. A huge wheat harvest in Russia does not sufficiently change that situation. Canada, among others, is also harvesting considerably more grain this year than in the disastrous 2021 harvest year.
More rapeseed and sunflowers
That the European corn harvest huge disappointment this year was announced at the end of last week. The French market agency Strategy Grains has a different story to tell for the yields of rapeseed and sunflowers. The agency has increased the figures for oilseed rape from 19,15 to 19,46 million tonnes in the EU-27. That is 14,5% more than was harvested last year. The harvest was not too bad, especially in Germany, France and Poland. The yield of sunflowers has also increased to 9,25 million tons. Soybean yields have fallen further.
For the rapeseed market, Strategy Grains expects more imports from Ukraine. The harvest in Australia has been adjusted upwards and Canada also expects a good harvest. This means that there is more product available on the world market, which puts pressure on the price. At the same time, there is more demand and rapeseed has a better margin than sunflower seeds or soybeans. Nevertheless, market analysts believe that the European market price will remain stable because the oil market provides an important floor. Biodiesel producers are also interested in blending rapeseed oil.