The grain market was hit hard during the last trading session. Favorable weather in both America and Europe put wheat prices in particular under considerable pressure. In India, on the other hand, wheat prices are rising. There, the supply of wheat is disappointing, while demand remains good.
The March wheat contract fell to €279,25 per tonne on the Matif yesterday. That is €5,50 lower than last Friday. On the CBoT, wheat lost 2,9% to close at $7.20 per bushel. Corn closed 1,5% lower and soy took a step back 1,1%.
Snow and rain on the US prairies put pressure on wheat prices, according to analysts. The wheat there has so far suffered from drought and the rainfall in recent days has brought relief. Furthermore, the snow provides a protective blanket on winter wheat against the cold weather forecast for later this week in parts of the US. In Europe, the frost around Christmas caused little to no damage to winter grains. At least that is what the JRC institute of the European Commission writes in the Mars bulletin published yesterday. The relatively high temperatures in recent weeks make grain vulnerable to a possible colder period later this winter, the JRC warns. A real cold period is not expected by the JRC. This week, temperatures in Western Europe will remain around the multi-year average and in Eastern Europe temperatures will be higher than average. For February, the institute expects milder temperatures in the Mars bulletin than average for this month.
India is struggling with a wheat shortage
While wheat prices are under pressure in the US and Europe, the price in India is actually rising. Since the Russian invasion of Ukraine, which caused international grain prices to skyrocket, the Indian government has been making frantic efforts to rein in domestic grain prices. For example, after extremely high temperatures during the growing season, the Indian government imposed an export ban on wheat. Although India is a relatively small player in the world wheat market, it is the second largest wheat producer in the world. Despite the export ban, there is a shortage on the wheat market. “Farmers have sold their wheat, traders are running out of stock, but demand remains robust,” an Indian grain trader told Reuters. According to sources, even large mills are having difficulty obtaining enough wheat and are struggling with high prices.
The Indian government has intervention stocks, but is delaying the release of those stocks. The price on the Indore stock exchange, one of the benchmarks in India, therefore rose by 7% this month to €331 per tonne. On the stock exchange in New Delhi, the wheat price rose yesterday by 2% to €355 per tonne, a new record price. The rising trend in Indian wheat prices is not over yet according to various sources. The Indian government is reportedly planning to release 2 to 3 million tonnes of wheat from intervention stocks to drive down prices on the domestic market. However, the government has little room to maneuver due to relatively small intervention stocks, according to traders.