The grain market is under pressure in both the EU and the US. Wheat from Russia and a possible lower demand for raw materials due to a faltering economy temper the expectations of traders and speculators. Remarkably enough, the soybean market seems to be little sensitive to these developments.
The wheat quotation on the Matif lost €4 yesterday and the March contract closed at €299 per tonne. On the CBoT, wheat took a big step back with a decline of 3,9% in the last trading session. The March contract fell to a two-week low at $7.45½. Corn also suffered a significant decline and fell 2,5%. The soy quotation also suffered a slight loss on the Chicago stock exchange, but the loss here was 0,6%.
The supply of relatively cheap wheat from the Black Sea region and a very large harvest in Russia are keeping the lid on the wheat market. However, that is certainly not the only explanation for the price correction on the grain exchanges. Traders and analysts are increasingly concerned about developments in the demand for grains. The economies of major markets such as the US, the EU and China are showing some flaws. Europe and the US mainly struggle with inflation, which hinders economic growth. In China, analysts are mainly concerned about the corona wave. This has a negative impact on the demand for raw materials in a broad sense and grains are no exception.
Weather market
The figures on the condition of winter wheat in the US, published yesterday by the USDA, are also still having an impact on the market. In particular, the significant improvement in the condition of winter wheat in Colorado and Oklahoma has somewhat surprised the market. The weather premium that was included in the wheat price is being reduced somewhat due to this news, according to insiders.
The weather continues to dominate the soy market. The drought in Argentina is certainly not over yet and that provides a solid base in the market. Argentina is experiencing its driest spring in 35 years, according to the Rosario Grain Exchange. The sowing of both corn and soy has therefore been significantly delayed and the actual area is expected to be smaller than the planned area. The drought in Argentina is pushing aside the attention of the good soy harvest that is expected for neighboring Brazil. That harvest has not yet been harvested, analysts warn. During the growing season, sufficient precipitation is needed to keep the crop growing well. However, rain during the harvest period - which has started cautiously in the first regions - has a detrimental effect on the yields and quality of the soy.