Prices on the grain market are taking a step down. As a result of China's strict corona policy - and the subsequent protests - the commodity markets are taking a hit. This is also noticed on the grain market. What is the impact on this market if unrest arises at one of the largest buyers?
Wheat prices are under slight pressure on both the Matif and the CBoT this trading session. The December contract for wheat on the Matif is more than 1% lower and on the CBoT more than 2,5%. Corn is approximately 0,5% lower. For soy, the decrease is limited to 0,1%.
The supply of wheat from the Black Sea region is putting pressure on the American wheat quotation in particular, according to several analysts. The Russian price for wheat, on the other hand, has risen somewhat, reports market agency IKAR. Wheat free on board (FOB) delivered at a Black Sea port rose $3 from last week to $317 per tonne.
Unrest in China
Uncertainty about the demand for wheat from China is increasing again. Chinese President Xi adheres to the very strict zero-corona policy. The population has rebelled against this in various places. That is quite exceptional in the authoritarian and generally law-abiding country. Most raw materials markets are therefore extra turbulent. Analysts are used to strict anti-corona measures from China, but a population that is widely rebelling against them is new.
Of the agricultural raw materials, it is mainly soya where Chinese demand plays a major role. Argentina is now trying to give soy exports an extra boost in the last weeks of the year. The country desperately needs soy exports for the inflow of hard dollars into the government treasury. By now applying favorable exchange rates, the Argentine government wants to encourage farmers and traders to export as much soy as possible before Brazilian soy from the new harvest comes onto the market.
Egyptian stock exchange
The Egyptian state purchasing agency GASC is making significant changes. GASC had already largely abandoned the system - in which grain is purchased via tenders - and purchased directly from major suppliers. Now the purchasing agency is launching its own grain exchange. National and international parties can trade grain there. GASC can act as either buyer or seller. The idea is that this will dampen the extremes on the market. The fair started on Sunday with the sale of 12.000 tons of Russian wheat from the strategic reserves. The new exchange must operate like a spot market, with prices determined by supply and demand. For the time being, the exchange works with a closed bidding system in which bidders submit their bids in a sealed envelope and GASC selects the best bids. The first wheat was sold for 9.750 Egyptian pounds (approximately €380) per tonne, spread over 18 transactions.
View the overview of grain prices and the technical analysis here.