Weak economy puts pressure on the grain market

The March wheat contract on the Matif closed €3,50 lower yesterday at €299 per tonne. On the CBoT, the March wheat contract gained 1,1% to close at $7.57¼ per bushel. Corn also traded higher, rising 0,5% to close at $6.53½ per bushel. Soy took a step back in Chicago and ended 0,6% lower.

According to various analysts, the moderate economic expectations hang like a gray veil over the market. The aggressive interest rate policy in particular is identified as the culprit. The American central bank, the Fed, opened the ball, followed by the European Central Bank (ECB) and the Bank of England. Soy in particular, a significant part of which is exported by producing countries, appears to be sensitive to this.

Larger harvest in the EU
A larger wheat harvest is expected for the EU in 2023 than in 2022. At least that is what the market agency Strategy Grains assumes in the forecast. The last harvest was characterized by heat waves and drought and a repeat of the recipe is not yet expected. For the coming harvest, the agency expects a limited increase in the harvest of 2,5%. That would mean a wheat yield of 128,7 million tons, compared to 125,5 million tons in 2022. The corn harvest last season amounted to 50,5 million tons, making it the smallest in fifteen years. Strategy Grains expects a significant recovery in revenues next year. The harvest is estimated to be 26% higher at 63,7 million tons.

Weather remains another dominant factor in the grain market. Precipitation was forecast for North and South America. However, in many places more could have fallen. According to various sources, the rain in Argentina has so far been too little to make a difference to the ailing start of the soybeans. In the US, snow fell in the drought-stricken prairies early this week. Every little bit helps, but here too it is still not enough to really solve the problems with the drought.  

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