Analysis Grains & Commodities
Export remains a tricky subject on the grain market
The down mood prevailed in the grain trade yesterday. A possible new grain deal weighed on wheat prices. Drought is and will continue to be a problem in the US. However, the new drought map made only a limited impression on the market. China managed to draw more attention to itself.
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Choose the subscription that suits youThe September wheat contract on the Matif closed €3,50 lower yesterday, reaching €224,25 per tonne. Wheat also took a step back on the CBoT, closing 0,7% lower at $5.73 per bushel. Soy showed a relatively large correction last trading session, dropping 1,5% to $13.60 per bushel. Corn moved mostly sideways, eventually closing at $4.61 per bushel, down 0,2% from the close a day earlier.
Will there be an (alternative) grain deal? That question has become very topical again. Putin and Erdogan will soon meet where grain trade is high on the agenda. They are expected to come up with their own alternative grain deal as a replacement for the Black Sea grain deal that collapsed a few months ago. UN Secretary General Antonio Guterres announced yesterday that he had submitted 'a set of concrete proposals' to Russian Foreign Minister Lavrov to revive the old grain deal. An anonymous Russian diplomat told Reuters that there was little new in Guterres' letter. "It is a list of previous ideas from the UN that did not get off the ground."
US will become even drier
The drought regions in the US continue to expand. At least that is what the new drought monitor that came out yesterday shows. This is becoming a serious problem, especially for the large corn and soy growing area in the Midwest, which experts say will cost tons of money anyway.
In contrast to the last few days/weeks, the market has responded only to a limited extent to the drought problems. This is partly due to the fact that prices drop slightly around the harvest and the strong dollar, which puts American exporters at a disadvantage. China is also mentioned by some analysts as one of the causes, especially for the correction in soy. The hairline cracks in the Chinese economy are increasingly starting to look like large cracks. Consider, for example, the half-finished apartment buildings that are no longer used. China is a major buyer of grains on the world market and if demand drops slightly, this could quickly cause a change in the mood in the trade.