The wheat market is in a serious downturn. A good harvest in Australia and competition from wheat from the Black Sea region put pressure on prices. Prices on the American and European stock markets are bottoming out and experts are divided on whether the provisional lowest point has been reached or whether prices will fall further.
Wheat prices were under considerable pressure last trading session. The December contract yielded €7,25 on the Matif to close at €313,25 per tonne. That is the lowest since the end of February. The most traded contract at the moment is the March contract, which closed €3,75 lower at €304 per tonne. On the CBoT, the March contract price fell 3% from the weekend closing price of $7,39 per bushel. The December contract even closed at $7,15½ per bushel, the lowest price in thirteen months. For corn and soy, losses were limited to 1,2% and 0,1% respectively.
Exporters from the US and the EU are currently experiencing stiff competition from relatively cheap supplies of wheat from the Black Sea region. According to several analysts, this is an important reason for the negative mood on the stock exchanges in Paris and Chicago. Russia has a large wheat harvest and that puts pressure on the market. According to market agency Sovecon, Russian farmers have threshed 105,3 million tons of wheat for an average yield of 3,60 tons per hectare. By comparison, last season's wheat harvest was 79 million tons with a yield of 2,84 tons per hectare. Yesterday there was news that a large grain harvest is also expected in Australia. The damage from the floods in the southeastern provinces appears to be less than expected, according to the Australian Bureau of Statistics Abares. Some experts note that Abares does not make any statements about quality. Due to the rain during ripening, more wheat may have to be deposited in the feed. Moderate exports in the US indicate the bears additional momentum in the market. The European market is somewhat affected by this, according to some experts, although European exports are ahead of last year.
Emotion
By the way, it was not only the wheat quotation that took a major hit. Oil and stock markets were also under pressure. The sales wave in the grain market is not entirely isolated. The big question on analysts' minds is whether the grain market has now reached the bottom or whether the decline will continue. A large harvest in Australia, but also good harvest forecasts, are food for the bears in the market. On the other hand, the wheat harvest in Argentina is disappointing and winter wheat is off to a bad start, in both cases due to drought. However, a price is not determined solely by supply and demand. Emotion also plays a role and is difficult to capture in predictions, according to some analysts.
View the overview of grain prices and the technical analysis here.