The grain market is struggling to choose direction. Wheat prices moved mostly sideways. The market has difficulty estimating wheat exports from Ukraine and acreage figures from France put a cautious pressure on the market. The most volatile of the last trading session was the soybean quotation. There, drought in Argentina remains a much-discussed topic among traders and analysts.
The March wheat contract on the Matif closed yesterday at €305,50 per tonne. That is €0,75 lower than the closing price the day before. Wheat also retreated 0,5% on the CBoT to close at $7.50¾ per bushel. Corn remained virtually unchanged on the Chicago stock exchange last trading session. Soy added 1,3% to close at $14.79¾ per bushel.
According to analysts, soya was on the rise due to a round of 'bargain buying'. The price fell on Monday and that attracted buyers who got in again yesterday. A major uncertain factor remains the predicted rain in Argentina. As long as the drought continues, a solid foundation will remain under the market. If there is sufficient precipitation over a large area, a downward correction is very likely according to several analysts.
There is still some uncertainty in the wheat market about the export of grain from Ukraine. On Sunday, activities in the port of Odessa were temporarily halted after Russian attacks. Exports could be restarted on Monday, but the market was confronted with the facts that there is a war raging in Ukraine and that despite agreements in the grain deal, smooth export is certainly not a given. Yesterday, the French Ministry of Agriculture released the expected wheat area figures. The ministry expects that a total of 4,75 million hectares of soft wheat have been sown. That is a growth in area of 1,7% compared to last season.
Shrinking inventory
In India, intervention stocks of wheat have fallen to their lowest point in six years. This is evident from data published yesterday by the Indian government. There were 1 million wheat in the state silos on December 19. A year earlier that was 38,85 million wheat. In 2016, the stock was lower than this year at 16,5 million tons in December. At that time, the stock had shrunk due to two disappointing harvests in a row in 2014 and 2015. This year, the stock has shrunk sharply due to government attempts to dampen price increases on the local market. This now puts the Indian government in a difficult position. Farmers and traders think that the wheat price in India may rise further in the coming months and are reluctant to sell. Wheat from the new harvest will only come onto the market in about four months, so there is no need to sell quickly. The intervention stock has become so small that the government now has few resources left to force or price lower. Due to the high wheat price, Indian farmers have sown more wheat this season. At the last reference date on October 1, 25,6 million hectares of wheat had been sown, according to the Indian ministry. That is more than 25% more than a year earlier.
View the overview of grain prices and the technical analysis here.