Analysis Grains & Commodities
CBOT down due to lower demand for corn and wheat
Corn and wheat became cheaper on the CBOT and more expensive on the Matif. This means that prices are rising again for the first time since October 13. The price of soybeans on the CBOT was also on the rise.
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Traders continuously keep an eye on the conflict between Russia and Ukraine. On Wednesday, Putin declared a state of emergency in the Ukrainian territories that Russia annexed through an illegal referendum.
Russia will also re-evaluate cooperation with UN Secretary General Antonio Guterres and his staff when he sends experts to Ukraine to inspect the downed drones, which may be of Iranian make. This was said by Russia's deputy representative to the UN, Dmitry Polyanskiy. He also told reporters that he is not hopeful that the Russia-Ukraine grain deal will be extended.
Sovecon analysts think that the gas agreement between Russia and Turkey could be a reason to cancel the grain deal between Russia and Ukraine.
Limited demand
The price of the December contract for wheat on the Matif fell, according to traders, as the high price of US exports has a negative impact on demand from importers. Meanwhile, farmers in the American Midwest are looking to the sky with hope. Rain has been forecast, which is good news for sowing winter wheat. US wheat exports are estimated at between 200.000 and 500.000 tons.
The Pakistani government has submitted an international tender for the purchase and import of 500.000 tonnes of wheat, several European traders said yesterday (October 19).
According to Sovecon, Russia's 2023 wheat harvest could drop to 84,8 million tons. This year, Russia expects to harvest a record amount of 100,6 million tons. Sovecon expects that Russia will significantly reduce the number of hectares sown with winter wheat after heavy rainfall and lower domestic prices. 18,8 million hectares are forecast to be sown. Last year that was 19,5 million hectares.
Corn continues to decline in price on the CBOT. This can partly be explained by the growing supply of corn due to the American harvest, but lower wheat prices also have an effect on corn prices. U.S. corn exports are estimated at between 250.000 and 775.000 tons. Weak export demand also puts pressure on prices.
Drought
In Argentina, the latest forecast from the Global Forecast System points to the driest October in more than 35 years. Now that soybean sowing is underway there, more rainfall would be appreciated by farmers there.
Soybeans were on the rise at the CBOT. There is enough demand for soybeans to cause prices to rise despite rising supply from the U.S. crop. The USDA expects the U.S. to export between 1,7 and 2,8 million tons of soybeans. Concerns that traders will shift their attention from the US to South America once supply becomes available there are limiting price growth. ADM has increased its forecast soy exports from Brazil by 11%, driven by expectations that the country will have a record crop this year.
Futures
The price of the December contract for wheat on the Matif rose by 0,37% to €336 per tonne. On the CBOT, the price of the December contract fell 1,17% to $8,41 per bushel ($309,11 per tonne). At the same exchange, the December corn contract fell 0,51% to $6,78 per bushel ($267,02 per ton). On the Matif, the November corn contract was on the rise, rising 0,31% to €327 per tonne. The CBOT November soybean contract rose 1 cent to $13,73 per bushel ($504,49 per ton).