December wheat prices on the Matif and CBOT fell sharply on Thursday, reaching their lowest point in more than a week by the end of the day. The November contract for maize also became cheaper on both exchanges. Finally, the price of the November contract for soybeans on the CBOT also fell.
Concerns about the global economy and a rain forecast for the US grain plains are the main causes for Thursday's slumping grain prices. The United States sold 229.400 tons of wheat last week. That was down from 280.000 tons the previous week and near the bottom of the expected range, which was between 200.000 and 450.000 tons. Corn exports are also declining and were a cause of the price drop.
Corn exports last week were 1 million tons lower than the same week last year. Total exports for 2022/23 are as much as 50,3% lower than last year. An important reason for the decline in exports is the good supply of corn from South America. IHS Markit lowered its U.S. corn crop forecast to 13,84 million bushels (3,52 million tons). Previously, the Brazilian corn harvest forecast was adjusted upwards.
Due to the better supply from South America, corn from the US is currently quite expensive and analysts expect this to remain so until at least February 2023. Due to the disappointing exports, American corn exports this year will amount to around 527 million bushels ( 133,89 million tons) behind last year. In the September Wasde report, the USA predicted a total export backlog of approximately 200 million bushels (50,8 million tons).
Brazilian soy
Analysts expect Brazilian farmers to harvest a record 150,62 million tons of soybeans this year. This despite the drought caused by La Niña. Expectations of a record harvest are largely driven by the fact that a record 42,83 million hectares are currently sown with soybeans. Moreover, the weather forecast is also good.
In China, the world's largest soybean importer, imports in October will reach their lowest point since March 2020, when the country was in the middle of the corona pandemic. An important cause for the low import is the crush margin - the price difference between soybeans and processing products - which has been negative for several months. In addition, the Chinese government's desire to be self-sufficient in terms of food supply also plays an important role. That is why the country invests a lot in its own soy cultivation. For now, Chinese soybean production has remained below 20 million tons for the past four seasons, accounting for about 20% of domestic demand.
Due to low imports, soy meal prices in China have reached record highs. Which in turn has an impact on pork prices in the country. That is one reason why the Chinese government announced on September 19 that it wanted to use less soy meal in animal feed. Synthetic amino acids and feed grass should reduce the demand for soy meal and drive down the price.
Low demand from China and high harvest expectations from Brazil are important reasons why soybean prices on the CBOT are falling. It is expected that imports will rise again in the last months of the year when the soybean harvest in the US really gets going.
Pricing
The December contract for wheat on the Matif closed at €345 per tonne at the end of the day on Thursday, 2,2% lower than on Wednesday. On the CBOT in Chicago, the price fell to $8,84 per bushel (€329,33 per tonne), a decline of 2,3% from Wednesday. On the same exchange, corn closed at $6,76 per bushel (€269,81 per tonne), a decline of 1,2%. On the Matif, corn stood at €337,25 per tonne at the end of the day, 0,44% lower. Finally, the November soybean contract closed at $13,60 per bushel (€506,81 per tonne), down 0,8% from late Wednesday.