The grain market closed negative across the board during the last trading session. A clear cause for this cannot be immediately identified, given conflicting reports from Ukraine and India. Trade may be especially busy taking positions ahead of the release of the Wasde report at the end of this week.
The wheat market took a small step back last trading session. On the Matif, the March contract closed €3,50 lower at €296,50 per tonne and on the CBoT the wheat price fell 0,3% to $7.45½ per bushel. Corn also lost slightly by 0,2%. The January contract for soy was still in positive territory, but the other contracts showed a small decline.
Market agency APK-Inform warned yesterday that the relatively mild winter weather so far in Ukraine could cause problems later. Due to rain last autumn, some of the winter wheat was sown later than optimal. The mild weather has ensured that a significant part of the winter wheat is hardly winter hardy. The thinly grown wheat in particular is susceptible to damage if it actually freezes later this winter. Furthermore, the warm weather has ensured that aphids, diseases and fungi have been able to spread in the winter crops for a long time.
In India, farmers could be looking forward to a record wheat harvest this year. This is what Reuters states based on sources in science and trade. Due to the high wheat price, Indian farmers have sown more wheat and increasingly opted for new varieties with a higher potential yield. Relatively low temperatures during the growing season - which runs from October to March - have helped wheat develop favorably in India. The total harvest would therefore amount to 112 million tons in the forecasts. Last year the harvest was 106,84 million tons at the world's second largest wheat producer. A heat wave during ripening in February could throw a spanner in the works for a top yield (as happened last year). Although India is a major wheat producer, the country plays a relatively small role in the world market. By far the most wheat that is produced remains in the home country. A large harvest could create room to export more.
American and European traders are cautiously anticipating the Wasde report, which will be published on Thursday evening Dutch time. It is expected that the disappointing wheat and soy yields in Argentina will (partly) be offset by moderate current exports from the US. Furthermore, the political unrest in Brazil is also taken into account on the grain market. The rate of the Brazilian real fell due to the storming of parliament by Bolosaro supporters, making soy and corn from Brazil more affordable on the world market.