Biodiesel boosts soy price

The wheat quotation on the Matif took a small step back yesterday. The December contract closed €1,25 lower compared to Friday, at €325,50 per tonne. On the CBoT, the December wheat contract fell 2,4% to $7.56¾ per bushel (approximately €268 per tonne). Corn and soy closed up 0,1% and 1,5% respectively on the Chicago stock exchange.

According to analysts, the wheat quotation is under pressure due to the supply of relatively cheap wheat from Russia and the unrest in China. The strict corona policy is putting a brake on the demand for raw materials in general, including grains. There is now some degree of social unrest, which is certainly a new phenomenon. This is considered an additional uncertain factor in the demand for grains on the market. Russian wheat is offered at a lower price on the world market compared to most other major suppliers. Remarkably, American exports in particular are suffering from competition from wheat from the Black Sea region. The Matif seems to be much less sensitive to this at the moment.

According to some analysts, US traders and speculators are also reducing positions in wheat and building up positions in corn. This provided support to the price of corn in the last trading session. The USDA's final Crop Progress report this season was supposed to be released yesterday, but it has been postponed. The USDA reports that there are problems with the system and now reports two days later with figures on harvest and sowing progress and the condition of the winter wheat.

Biofuel
The soy quotation received a boost from a possible greater demand for biofuel. Several analysts expect the U.S. Environmental Protection Agency to determine a larger share of biofuel in the energy mix for the transportation sector next year. This caused the price of soy oil - which can be blended in diesel - to rise, which pushed up the soy price. Furthermore, drought in South America remains a hot topic. In parts of Argentina it is too dry to sow soy and certain regions in Brazil also suffer from a significant rainfall deficit. Meanwhile, farmers in Brazil are in no hurry to buy fertilizer for the post-crop corn that is sown after soy, Jeferson Souza, an analyst at Agrinvest, told Reuters. 'Second crop corn', as the second crop of corn after soy in a growing season is called, typically accounts for three-quarters of Brazil's corn production. According to Souza, Brazilian farmers have purchased about 75% of the inputs needed for second corn. The five-year average is 83%. "Growers see that prices for cultivation supplies (such as fertilizer) are falling sharply. They are now postponing purchases for as long as possible in order to increase crop margins," says Souza. Drought in states such as Mato Grosso is also a concern for growers, but the weather problems have so far done little to detract from the good yield expectations for the corn and soy harvest in the 2022/23 season, according to Souza.

View the overview of grain prices and the technical analysis here.