The weather seems to be the biggest driving factor on the grain market at the moment. Rain in parts of the US gives some relief to the wheat market. Furthermore, market players are also fairly confident in their ability to keep grain exports from Ukraine going after the current grain deal expires next month. The CEO of Archer Daniels Midland (ADM) made a strong statement about this yesterday.
Wheat prices on international stock exchanges were under cautious pressure during the last trading session. On the Matif, the December contract lost €2,50 to close at €336,50 per tonne. On the CBoT, wheat closed 0,5% lower at $8.34,75 per bushel (approximately €306 per tonne). That is the lowest price in five weeks. Corn and soy both closed marginally higher by 0,7% on the Chicago exchange. There is no real impetus to give clear direction to prices, according to several analysts.
Rains in parts of Kansas, Oklahoma and Texas are improving growing conditions for winter wheat sown. According to analysts, this somewhat alleviates concerns about drought. This certainly does not remedy the precipitation shortage. It remains too dry in more than half of the southern wheat belt in the US. The rain may still have a small effect on the low water level in the Mississippi. The low water level in the river is currently causing problems with, among other things, the export of grains.
Competition
A somewhat difficult export of wheat from the US is also being taken into account by traders on the American stock exchange. Wheat from Russia and Ukraine in particular is quite competitive compared to American wheat. For buyers, the lower price of wheat from the Black Sea region currently outweighs the risk that the grain deal will not be extended next month. The director of ADM, Juan Luciano, made a striking statement about this yesterday during the presentation of the company's quarterly figures. He doesn't see any major development that could derail the deal's extension in November. The Ukrainian Council of Agriculture expects that exports of agricultural products will increase by 8% in October compared to September. The area of winter wheat is estimated by the Ukrainian Ministry of Agriculture at 3,8 million hectares. This is the same as the previous estimate despite delays in sowing due to unfavorable weather conditions.
The US agricultural attaché in Buenos Aires yesterday (Tuesday, October 25) published an update on grain production in Argentina. Compared to the latest USDA estimate, the expected yields have been significantly adjusted downwards due to persistent drought. The wheat harvest for the 2022/23 season is estimated at 15,5 million tons. That is 2 million tons lower than the USDA estimate. Argentinian exports for this season are therefore stuck at 10 million tons. Barley exports are also estimated lower at 3 million tons, 0,5 million tons lower than the USDA figures. The attaché expects Argentina to export 37,5 million tons of corn. That is an adjustment of 3,5 million tons downwards from the official USDA estimate.