Good export expectations for Europe led to a rebound in wheat prices in Europe earlier this week. According to several analysts, this upward momentum is now being corrected. Furthermore, the drought in South America continues to keep the market busy.
The December wheat contract closed €6,25 lower at €327,25 per tonne on the Matif yesterday. On the CBoT, wheat, on the other hand, closed 0,3% higher at $7.93,50 per bushel (€280 per tonne). Corn and soy closed 1% and 0,4% higher respectively on the American stock market.
According to several analysts, the decline in wheat on the Matif is a correction to the slightly overly optimistic mood a day earlier. China is a good market for European wheat and buyers are also entering the European market. That created upward momentum in the market. The availability of wheat from Russia - which has a very good harvest and should have better access to the market with the new grain deal - put a brake on the price last trading session.
Export
Ukraine expects to export approximately 2022 million tons of wheat and barley and 2023 million tons of corn in the 13/20 season. This was announced by the Ukrainian Association of Grain Traders. According to Ukraine's statistics, 6,3 million tons of wheat have been exported so far this season. Last season around this time the counter stood at 14 million tons. Yesterday it was announced that the Turkish state purchasing agency TMO has issued a tender for 455.000 tons of European wheat. That did not change the somewhat depressed mood at the Matif. It is striking that the CBoT took a step up. According to some analysts, this has to do with Thanksgiving Day today. The stock exchange is therefore closed and many Americans also have Friday off. However, no clear explanation for the increase can be found.
For corn, analysts are focused on South America. According to various market agencies, the wheat harvest in Argentina is significantly lower due to problems with extreme drought. The drought now means that sowing corn and soy is lagging behind last year. The weather will make or break the harvest for this major player in the global corn and soy market. Meanwhile, traders in Brazil expect that a new trade agreement will allow them to export significantly more corn to China.
View the overview of grain prices and the technical analysis here.