At first glance, the grain market was down last trading session. Analysts have logical explanations for this for corn and soy. With wheat it is more difficult to indicate what is happening now. This is apparent, among other things, from the major contradictions between the various wheat quotations.
The grain market showed a sharp decline last trading session. The May wheat contract on the Matif gave up as much as €11,50 to close at €225,50 per tonne. Most of the trading is on the September contract, which fell €7,50 to €234 per tonne. On the CBoT, the July wheat contract closed down 1,6% at $6.43½ per bushel. Corn and soy were also down. The July corn contract closed 2% lower at $5.84¾ per bushel and soy lost 1,4% to close at $14.14¼ per bushel.
The decline in corn and soy does not come as a surprise to analysts. Sowing of both crops in the US is ahead of the multi-year average and the weather reports are favorable for a flying start. Private exporters report that China has canceled an order for 272.000 tons of corn. The large harvest in Brazil is also putting pressure on corn and soy prices.
Complex
What is happening in the wheat market is more difficult to explain. There are several factors suggested to explain the decline in wheat on the Matif and CBoT. The final stock of wheat in the EU in the 2022/23 season will be relatively large, several analysts expect. This is partly due to the relatively large import of wheat from Ukraine. The UN reports that inspections of outgoing ships under the grain deal resumed yesterday (Tuesday 9) May. Incoming ships are not yet being processed, various sources report.
The fact that the extension of the grain deal is at risk remains a major uncertain factor hanging over the market. The Ukrainian Minister of Agriculture does not see the possible non-extension of the grain deal after May 18 as an apocalyptic scenario. “We do not foresee any apocalyptic scenario due to a million circumstances,” Reuters quotes Minister Mykola Solsky. "Ukrainian farmers and Ukrainian traders have shown that they can do a lot and many (export) routes can be built." Today and tomorrow, the parties involved in the grain deal will meet in Istanbul to discuss the extension, the Russian state news agency RIA reports.
Opposite movement
The tension in the wheat market is perhaps best reflected in the differences between American wheat quotations. As mentioned, the July wheat contract on CBoT fell 1,6%. In contrast, the other major wheat listing, CME Group's US Kansas City Hard Red Wheat Futures (KC HRW), closed 1,4% higher at $8.56 per bushel. The spring wheat quotation of the Minneapolis Grain Exchange (MGEX) was somewhere in between last trading session, gaining 0,5% at $8.47 per bushel.
The developments in the Black Sea region weigh less heavily on the American market, according to analysts. Here it is mainly the weather conditions that make or break the market. The drought in Kansas and Oklahoma and the resulting poor wheat condition in those states are particularly concerned by several analysts. The slow pace of sowing spring wheat further north also does not do any good to confidence in a large harvest.