The wheat prices of the Matif and CBoT are increasingly diverging. Last trading session, Paris closed in the plus and Chicago in the minus. Partly due to the expensive dollar, the US is less competitive on the world market. Europe, meanwhile, is only slightly affected by Russia, which has put wheat on sale after a top yield.
The December wheat contract on the Matif closed €5 higher yesterday at €330,75 per tonne. On the CBoT, wheat closed below $8 for the first time since early September, at $7.99¼ per bushel (approximately €286 per tonne). Notably, on the CBoT, prices for the March, May and July contracts increased and closed at $8.18¼, $8.27½ and $8.31 per bushel, respectively. On the Matif this is reversed and the March contract closed at €312,75 and the May contract at €319,25 per tonne. Corn closed 1,2% lower on the CBoT. Soya is in a positive position on the American stock exchange and was trading 0,6% higher.
In Europe, the wheat growing season has started favorably, according to the Mars bulletin from the JRC institute, which is part of the European Commission. Due to exceptionally high temperatures in combination with sufficient moisture in the soil, the winter crops emerged and developed quickly, according to the JRC. The Mars bulletin warns for parts of southern Europe that it is becoming too dry for winter crops. For oilseed rape, the JRC adds that there is high pest pressure. Due to the rapid development, the crops are also less hardy, but that is not yet a reason for concern according to the JRC.
Wheat is drying out in the US
The start of winter wheat in the US is less favorable, according to the USDA's Crop Progress report. 87% of the sown area is above ground and is therefore slightly ahead of the fig-year average in which the emergence percentage for this period is 86%. 32% of the winter wheat acreage in the US is rated good or excellent and 33% poor or very poor. Last week, 32% received the status of poor or very poor and last year 44% of the area was rated good or excellent. Of the total agricultural area, 53% have a shortage or major shortage of soil moisture in low cultivation. In fact, 75% of the wheat area has a moisture deficiency. This season is off to the worst start of winter wheat since 1986 when the USDA started keeping this statistic.
The wheat price in the US is under pressure due to an expensive dollar that makes American wheat relatively expensive on the world market. Traders are concerned about a possible rail strike in the US. The largest railway association has voted against an agreement that was negotiated in September. Together with the low water level in the Mississippi, this can cause additional problems with grain exports. Corona also plays a role in China. New outbreaks and a strict corona policy are weighing on the economic prospects for China. This effect is clearly visible in the oil quotations and grain is included. On the other hand, China has a price-raising effect on the European wheat market. China has already purchased a relatively large amount of wheat in France and, according to Refinitiv data, approximately 300.000 tons have already been loaded in French ports. Yesterday, rumors emerged that China wants to buy extra wheat in France or northwest Europe.
View the overview of grain prices and the technical analysis here.