The wheat quotation is still under pressure. In the declining market, soy is the exception, despite disappointing import figures from China. Europe announced new legislation yesterday to combat deforestation. The green lobby sees it as a good step by the EU, but there is also a lot of criticism of the (practical) implementation of the law.
The December wheat contract on the Matif gave up €5 yesterday to close at €308,25 per tonne. The most traded contract, the March contract, fell by €2,75 to close at €301,25 per tonne. On the CBoT, the March contract closed 1,4% lower at $7,29 per bushel. Corn was 0,5% lower on the Chicago stock exchange. Soy is the exception in the declining market and rose 1,2% in the last trading session.
Wheat prices are under pressure due to ample supply on the world market. Russia has had a record harvest and the preliminary harvest figures from Australia are also promising. As a result, American exports in particular are lagging behind somewhat. Exports from the EU, on the other hand, are ahead of last season. Up to and including December 4, 14,49 tons of wheat have been exported, according to figures from the European Commission. Last year the counter stood at 14,0 million tons in the same week. This means the lead this season is 3,5% compared to last season.
Downward spiral
Wheat prices are in a downward spiral, but that does not mean that buyers are giving up in the expectation that prices will be significantly lower in the long term. For example, Pakistan bought 950.000 tons of wheat on Monday, several sources said. It is expected that this will mainly concern Russian wheat. Drought continues to play a major role in both North and South America. As long as there is no major change in the weather, buyers will remain active. The weather premium in the wheat price is now being phased out, but that could change again in the near future, according to some experts.
The increase in soy prices can be called remarkable in a certain sense. China imported 7,35 million tons of soybeans in November, according to customs data published yesterday. That is 14% less than in the same month last year. However, experts expect that exports will pick up considerably in December. Due to corona lockdowns in November, the customs clearance of soy was delayed. This backlog must be made up and because China is relaxing its very strict anti-corona policy, it is expected that the demand for raw materials, including soy, will continue to increase. The poor status of soy in Argentina also supports the soy price. One third of early soya soy is in poor condition due to drought in the main growing areas in Argentina, according to the Rosario stock exchange. And that will not change in the coming days if the weather forecasts come true.
Deforestation free
The EU announced a law yesterday requiring companies that import soy, palm oil, livestock/meat and derivative products to demonstrate that no rainforest has been cut down for production. Supporters and opponents of the law speak of a historic decision. The green lobby presents the new law as a victory and states that companies must now really work on combating deforestation. Countries such as Brazil, Indonesia and Colombia argue that the rules will be cumbersome and expensive and ultimately restrict free trade. A critical note that experts make is how the legislation will affect (smaller) farmers. That is a large group in the supply chain. They will have to demonstrate that no rainforest has been cut down for their products, but they do not have the same resources as large agricultural concerns for, for example, a certification or track and trace system.
View the overview of grain prices and the technical analysis here.