The grain market moved mainly sideways during the last trading session. Prosperous exports of grain from the EU and winter conditions in the US support the wheat market, but do not really get prices moving. The soybean market is dominated by news from South America. In Argentina, the drought problems are taking the upper hand again. Brazil can still bring some air to the market because of the harvest that will start there in just over a month.
The March wheat contract on the Matif closed yesterday at €296,50 per tonne. That is €1,25 lower compared to the close the day before. Wheat on the CBoT closed 0,2% higher at $7.50½ per bushel. Corn rose 0,7% in Chicago and soy rose 1,2% to close at $14.78½ a bushel.
On the wheat market, traders are weighing the availability of relatively good wheat from the Black Sea region, the booming exports from the EU and severe winter cold in the US. The Ukrainian Port Authority announced yesterday (Tuesday, December 20) that grain exports via the Danube ports have risen to a record high. This year, 6,1 million tons have already been shipped from Ukraine via the Danube. Wheat exports from the EU are ahead of last season. This season through December 18, 15,70 million tons of wheat have been exported from the EU versus 14,88 million tons last season. Wheat from France in particular is popular with buyers from outside the EU. France already exported 5,62 million tons this season. In the same period a year earlier, the counter was stuck at 3,61 million tons.
Wintering out
In the US, several analysts are concerned about the freezing temperatures in parts of the prairies. The winter wheat has already entered the winter in a moderately developed state due to last autumn's drought. A blanket of snow can protect the wheat from the cold, but not all prairies have had significant snowfall. Wintering out is therefore a serious threat to American wheat, several analysts warn.
With European exports doing well and frost in the US, an increase in wheat prices would not be illogical according to several analysts. The futures markets are receiving support from this news, but the quotes are not really willing to make any progress. The wheat crop can withstand quite a bit and often wants to recover in the spring. And that is what trade now seems to be based on for winter wheat.
The soy market is mainly influenced by news from South America. Rain fell in dry Argentina over the weekend, which put pressure on the odds. This certainly does not yet solve the drought problem. There is no rain in the weather reports for Argentina for the next week and a half. Farmers have already sown less soy due to the drought and from what it says, yield expectations are not great due to the lack of moisture. Neighboring country Brazil - the largest soy exporter in the world - is much less affected by the drought. In Brazil, the harvest is expected to start at the end of January. That could put pressure on the soy market by then. But that will largely depend on the realized returns.