The grain market closed last trading session again with deep red figures. Area forecasts, yield forecasts and weather reports weighed on the mood. Furthermore, traders and speculators are already digging in ahead of the USDA's so-called acreage report that will be released on Friday.
The September wheat contract on the Matif took a step back for the second trading session in a row, closing €5,25 lower at €231,25 per tonne. Grain prices also closed in the red on the American stock exchange. Wheat fell 4,2% to $6.55¾ per bushel. Corn was the biggest decliner on the CBoT, dropping 5,3% to $5.90 per bushel. Soy closed last trading session at $14.51 per bushel, down 2,9% from the previous close.
New acreage figures and yield forecasts put pressure on the wheat market. Some conflicting figures from harvest forecasts are coming out from Ukraine. Market agency APK Inform expects a total wheat harvest in Ukraine of 16,1 million tons in the new forecast. That is below the estimate in the latest USDA Wasde report, which projects a Ukrainian harvest of 17,5 million. The Ukrainian Ministry of Agriculture assumes a wheat yield of around 17 million tons. The Ukrainian Farmers' Union goes directly against APK Inform's expectations. According to the association, the Ukrainian wheat harvest could reach 24 million tons or more. This brings the harvest close to pre-war levels. The growing season is good in Ukraine and with a bit of luck this can result in high yields per hectare, the farmers' association expects. It is difficult for analysts to make sense of all the different estimates from Ukraine. A gap of 8 million tons between the highest and lowest yield forecast in the same week is very large.
Wheat is popular in Canada
Canadian farmers have sown the most acreage of wheat in 22 years, according to statistics agency Stats Canada. In total, 26,9 million acres (10,9 million hectares) of wheat grow in Canada. The area is therefore slightly higher than the 26,5 million arce that the trade assumed. The Russian Ministry of Agriculture also released area figures. The sowing of the crops is as good as completed and a total of 55,6 million hectares are cultivated in Russia.
In corn and soy, the weather premium is being further reduced and, to a certain extent, this is also pulling down the wheat price. In the Midwest of the US (the large arable area) approximately half of the usual precipitation has fallen in the past 60 days. You would think there is no reason to reduce the drought premium in the price. But market players show a lot of confidence in the weather forecasts. Significant rain is forecast for the coming week and that could give a good boost to the development of corn and soy.
Grain market players are also taking their positions ahead of the release of the USDA acreage report, which will be released tomorrow afternoon Dutch time. The chance of a bearish signal is historically slightly higher than a bullish signal, if you look at the price movement of wheat on the CBoT in recent years. In that sense, a further downward correction in the wheat market does not seem illogical today.