The grain market continues to search for the bottom in the market. Grain prices closed in the red in both Europe and America. The yield expectations for the coming harvest are not bad, although it is of course still very early to make reliable statements about this and the demand on the world market is not easy.
On the Matif, the May contract broke through the lower limit of earlier this month and lost €4,50. The price yesterday amounted to €238,25 per tonne. On the CBoT, wheat prices fell 2% to $6.14¾ per bushel. Corn fell even harder on the American stock market, losing 2,3% to reach $6.27 per bushel. Soy also did not escape the more negative mood and fell 0,6% to $14.26¾ per bushel.
The grain market continues to look for the bottom in the market. On the Matif, wheat fell through €240 per tonne, which was seen as a support level by analysts. Disappointing exports and good yield expectations for the 2023 harvest in the EU are putting pressure on the market. The European Commission has adjusted the export forecast downwards by 1 million tons to 31 million tons for the 2022/23 season. In the meantime, considerably more grain from Ukraine has entered the EU. In this sense, the protests of the Eastern European member states against competition from grain from Ukraine are not unexpected.
Dilemma
Ukrainian farmers face a difficult choice about what to do for the upcoming harvest. Part of the agricultural land recaptured from the Russians is littered with mines. Cleaning up is a time-consuming job and part of the area will therefore remain uncultivated. Another major problem for Ukrainian farmers is the marketing of the products. There is resistance in the EU to duty-free imports and Russia continues to threaten to cancel the grain deal, which would also eliminate exports via the Black Sea. And while the 2022 harvest has not even been finished yet. Farmers are careful about incurring costs. Leaving part fallow is seen as a realistic option, partly because the weather has not cooperated well with the spring work everywhere, some Ukrainian media report. Why would you incur the costs for seed, fertilizer and crop protection if it is highly uncertain whether someone is waiting for your products? The actual yields this autumn could therefore turn out to be a lot lower than what the USDA or the Ukrainian Ministry of Agriculture, for example, is currently calculating, some analysts think.
China is stirring up unrest
China caused unrest in corn yesterday. Last Monday (April 24), Chinese buyers canceled a 327.000 tonne corn order in the US, the USDA said. Yesterday there was a second cancellation of 233.000 tons. With the loss of a few large orders from China, confidence in the market is also taking a hit. China remains an unpredictable player in the grain market. In mid-March, the market was still in turmoil due to China's large corn purchases on the American market (millions of tons). It is therefore not surprising that a few orders are now cancelled.
Corn and soy prices are also under pressure due to the favorable growing season in Brazil. This has yielded a large harvest and farmers want to cash in on it, which now provides additional supply. What is remarkable is that you now hear no one about the small harvest in Argentina. The drought in that country was mentioned a few weeks ago as a reason for a strong foundation in the market. The relatively favorable spring in the US so far for corn is also helping to keep prices in check. The Crop Progress report from earlier this week shows that growers are ahead in sowing maize and some analysts expect that this lead will certainly not be lost. And with timely sowing, the crop has maximum yield potential.