Wheat prices were under pressure during the last trading session, partly due to the expectation of ample supply from Russia. Corn, on the other hand, made an advance. Market players are becoming increasingly concerned about drought in the US and demand for gasoline is also feeding into corn prices, according to some analysts.
The September contract for wheat on the Matif closed €4,25 lower yesterday at €222,50 per tonne. The wheat quotation on the CBoT was also under pressure. The July contract gave up 2,6% to close at $6.22¼ per bushel. Soy showed modest gains in Chicago, closing 1,5% higher at $13.24½ per bushel. Corn made a bigger move higher, rising 1,7% to $5.87¼ a bushel.
An ample supply of wheat from Russia is pushing aside concerns about problems with wheat exports from Ukraine. Various sources assume a good harvest in Russia. Earlier this week, the Kremlin expressed the expectation that it would be able to export 55 million tons of grain. According to some analysts, this puts some pressure on the wheat quotation in Paris. Although Russia continues to undercut the price on the Matif.
That is one of the reasons why American analysts keep a close eye on what is happening in Europe. European wheat is competitively priced on the world market. Buyers have purchased 210.000 tonnes of wheat in the European Union, with Poland and Germany the biggest suppliers, according to EU export statistics. The forecasts for wheat in the US state of Kansas (one of the largest wheat states) in the Winter Wheat Tour were not very encouraging last week. Opinions differ about the effect of rain in the area, but in general it is mentioned as a price-depressing factor. The Winter Wheat Tour has now ended up in Illinois and the yield forecasts there are a lot better. On the plots in the tour, the average yield is 97 bushels per acre (approximately 6,5 tons per hectare). That is well above the 78 bushels per acre (approximately 5,2 tons per hectare) that the USDA expected in the Wasde report earlier this month and above the average in the last two seasons of 79 bushels per acre (approximately 5,3 tons per hectare). XNUMX tons per hectare).
Growing demand for gasoline
Developments in the corn market are currently more exciting than in the wheat market. Little precipitation is forecast in the US Midwest, the main growing region, until the first half of June. Various analysts call this favorable for soy, because sowing can then continue without delay, while for corn there are various reports that this is unfavorable for growth. A slightly drier start to the season is not a bad thing. The maize can therefore be sown without structural damage and it helps the plants to develop a good root system. The concerns about drought are more about the fear that it will remain dry for too long and we will have a repeat of the 2021 growing season. That is why the weather premium is being built up somewhat on the futures market.
Demand for corn on the world market remains on the weak side. Brazil is taking on the role of price fighter and is able to do so because of the very good harvest of the second crop of corn after the first crop of soy. Use of corn for ethanol production in the US fell further last week. At the same time, the demand for gasoline is increasing. As a result, American ethanol supplies have fallen to their lowest level in six months. That combination could trigger additional demand for corn for ethanol.