The grain markets remain somewhat in a minor mood. The bearish Wasde report is still lingering and speculators are feeling pressure to exit before the market dips further. Messages that normally have a (small) price-increasing effect are currently barely getting a grip on the market.
The December wheat contract gave up €1,50 on the Matif yesterday to close at €327,25 per tonne. That is the lowest quotation since mid-September. On the CBoT, wheat prices fell 0,4% to $8.03,50 per bushel. Corn and soy showed sharper declines, dropping 1,7% and 2%, respectively.
Analysts partly attribute the decline in the grain market to the Wasde report. That was bearish in tone, mainly due to higher inventories. Drought in Argentina is a concern. The Buenos Aires grain exchange yesterday lowered its yield forecast by 1,6 million tons from the previous expectation to 12,4 million tons. The Rosario stock exchange previously made a similar reduction and assumes the smallest wheat harvest in seven years. Now attention is focused on the wheat market because the harvest is imminent in Argentina, but there are also concerns about soy. That crop needs to go into the ground, but it is too dry to get the plants up. Farmers therefore wait before sowing.
Bag up
The problems with grain exports from Ukraine continue to concern grain market players. Not only is export much slower, but bombing and shelling have also damaged silos and other storage facilities and made them completely or partially unusable. As a temporary solution, the UN food organization FAO has made 30.000 film tubes available with which approximately 6 million tons of grain can be secured. Farmers are not yet overflowing with interest. Only 7.500 trunks are in use. According to the local FAO spokesperson, it is important that farmers wait for better prices where possible. Since the Russian invasion, prices on the local market have collapsed. As a result, Ukrainian farmers are having difficulty keeping their heads above water.
Shortly after the Russian invasion, India wanted to relieve pressure on the wheat market by exporting additional wheat. Little came of that promise because, among other things, India had less wheat available due to drought than the country had expected at the end of February. An export ban was even imposed in May. The situation on the Indian market has now changed to such an extent that there is a significant shortage. This drives up prices to such an extent that the government is now taking measures to get the wheat price back in line. Initially, this involves putting part of the intervention stock on the market, but there is also talk of suspending the 40% import duty on wheat.