The grain market presents a mixed picture. Good arguments can be made for both bulls and bears in the market. From a slow harvest in Europe, floods in China to high wheat yields in Ukraine. Plenty of news, but nothing that immediately stands out and sets the course in the grain trade.
The September contract for wheat on the Matif closed €2,50 lower yesterday at €242,25 per tonne. In Chicago, wheat took a harder hit. The September contract on the CBoT fell 3,2% to $6.35 per bushel. Corn also took a step back, but here the loss was limited to 1%. Corn on the CBoT closed at $4.81 per bushel. Soy remained virtually unchanged on the American stock market. The near-expiration August contract closed 0,1% higher at $14.31½ per bushel.
The wheat market is searching according to various analysts. There are good arguments for both an upward and downward trend in the near future, but there is no one thing that really stands out and that determines the price on the market. In Europe there are problems with the quality of wheat. Drive around the polder in the Netherlands and you will see where care comes from. Alloy and shot are the rule rather than the exception. Getting wet and then drying out again is not good for the hectoliter weight. Of course, the Netherlands only has a small share in the European wheat harvest, but larger growing regions in France and Germany face the same problems. In the south of France the wheat harvest has largely been completed, but north of Paris there is still a lot to be determined.
Speculation
There is also a lot of speculation about what adjustments the USDA will make in the August edition of the Wasde report, which will be released on Friday evening Dutch time. Speculators who are counting on a rise in prices assume that the USDA cannot avoid cutting yields in Europe, Argentina, Canada and the Black Sea region. The bulls in the market are getting extra fuel from disappointing grain exports from Ukraine in July. Compared to June, approximately 40% less wheat was exported in July, according to data from the Ukrainian Ministry of Agriculture. The termination of the grain deal naturally plays an important role in this.
The bears in the market also have their eyes on Ukraine. They see the good wheat yields in the country. The Ukrainian Association of Grain Traders, the Ukrainian Ministry of Agriculture and agencies such as SovEcon and APK Inform are all talking about above-average hectare yields, sometimes even approaching record levels.
China on the hunt for grain
China is another player contributing to the uncertainty in the market. The northeast of the country is experiencing flooding. Mainly corn, soy and rice were lost. Wheat was harvested in the region more than a month ago, but due to a rainy period during threshing, the quality leaves much to be desired. It therefore seems logical that China is looking around for where grain can be purchased to maintain stocks. And yesterday there was a rumor that China bought two ships of wheat from the US. China is also said to be in the market for corn in the US. The USDA estimated corn exports to China at 23 million tons, but several analysts think that could be higher, up to 25 million tons.
Weather is another seasoning among US traders. The north of the country has recently received quite a bit of rain. The chance of a weather change increases in the ten-day forecast. The dry, warm weather would then return to the cornbelt. The rainfall deficit that occurred this season has not yet been made up and a new dry period could still cost yields.