The grain market is mainly moving sideways. Problems with exports, drought in America and flooding in Australia are balanced by a possibly smaller demand from China. Furthermore, traders and speculators are cautious about taking positions in connection with the Wasde report to be released tomorrow.
Wheat prices were under slight pressure last trading session. On the Matif, the December wheat contract closed €3,25 lower at €336 per tonne. On the American exchange, wheat also closed marginally lower by 0,2% at $8.45,75 per bushel (approximately €311 per tonne). Corn and soy also closed lower, both down 0,8%.
According to analysts, the lower prices are partly caused by lower export figures. Developments in China in particular are currently being closely monitored for trade. China denied that the zero-corona policy is being abandoned. The strict lockdowns in which millions of cities are completely closed off have far-reaching consequences for the economy and therefore indirectly also on the demand for grain in the country. Soy, of which China is a major buyer on the world market, is particularly affected.
Although the grain markets have been somewhat down in recent days, the market is still mainly dominated by tightness. Whether and how the grain deal between Ukraine and Russia will be continued after the expiration of the current deal, which expires on November 19, remains one of the major uncertain factors, especially on the wheat market. Concerns about the wheat harvest in Argentina (drought) and Australia (too wet) also contribute to this. In these areas the harvest will start in about a month and a half.
Bad start
Yesterday the USDA released the weekly update of the Crop Progress report. According to the USDA, the corn harvest is 87% complete and the soy harvest is 87% complete. This means that the harvest this season is well ahead of the five-year average, which is 76% for maize and 86% for soy. The sowing of winter wheat is also ahead of the five-year average with 92% in the ground compared to 90% in the five-year average. The status of the crop is not very optimistic. 30% of the area is given the status excellent or good and 34% poor or very poor. For comparison: this time last year, 45% received excellent or good status. Wheat in the US has not been in such bad shape since the late 80s.
The fact that the market feels a bit lukewarm also has to do with the Wasde report that will be published tomorrow evening (Dutch time). Several analysts expect that yield forecasts for South America will be adjusted downwards. The major uncertainties are Australia and the Black Sea region. Furthermore, several private market agencies have cautiously adjusted yields for the US corn crop upwards. Traders appear to be anticipating that the USDA will take a similar step.