Precipitation early this week in North and South America lowered the risk premium in grain prices earlier this week. The lower prices attracted buyers again last trading session. Export figures also supported the wheat price on the Matif. The weather in South America also continues to keep the grain market busy.
The March wheat contract on the Matif gained €2,50 yesterday to close at €281,75 per tonne. Wheat has also found its way to the top on the CBoT. In Chicago, wheat closed 2% higher at $7.34½ a bushel. Corn was up 1,6% to close at $6.77 a bushel. Soy moved mainly sideways and 0,1% lower.
The dip in wheat prices earlier this week attracted bargain hunters who made their move yesterday, according to several analysts. In addition, European wheat export figures gave the Matif additional support. This season, the EU has exported 22 million tons of wheat until January 18,14. That is 6% more compared to last season, when the counter stood at 17,1 million tons. Barley exports are lagging behind last season. So far, 3,09 million tons of barley have been exported, compared to 5,17 million tons last season. At the same time, 81% more maize has been imported by EU member states. The total this season until January 22 stands at 16,13 million tons of corn. Last season that was 9,91 million tons.
Unfair competition
According to several analysts, the extra corn imports are related to the war in Ukraine. As a result, a relatively large amount of maize enters the EU overland and via the Danube. This is causing dissatisfaction among farmers in various countries in the east of the EU. The European Commission has focused on alternative grain corridors to keep Ukrainian exports afloat despite the problems in the Black Sea. Relatively much maize finds its way to Europe via these roads. Ukrainian farmers and traders are offering this corn at 'dump prices' according to some analysts. The large supply of corn from Ukraine makes it difficult for farmers and traders in Poland or Romania, for example, to sell their own corn harvest. They believe that too little attention is paid to the consequences of European policy on the local agricultural market and that Eastern European farmers now face unfair competition from their colleagues from Ukraine.
According to analysts, the fact that soy, unlike corn and wheat, mainly moves sideways is due to rain in South America. Significant rain has finally fallen, especially in dry Argentina. The Rosario grain exchange writes in the market update that more rain has fallen in recent days than was predicted in the most optimistic weather reports. In some places more than 125 millimeters fell. Still, the stock exchange warns that we should not become too optimistic about the positive effects of water on crop forecasts in Argentina. Only 15% of the Pampa region received more than 45 millimeters. For Santa Fe and Cordoba these percentages are 5% and 3% respectively and there are also parts of the country that have had no precipitation at all. In the north of Brazil, farmers are no longer waiting for rain for the time being. Things are starting to get a bit wet there for subsequent cultivation of maize after the first cultivation of soy.