The grain market is full of contradictions. In the US, wheat took a step back after the Chinese buying spree stopped. Traders in Paris do not let this distract them too much and stoically continue to follow their own course. In corn and soy, South America is leading the charge, although the effects on the market are somewhat contradictory.
The December contract for wheat on the Matif expired yesterday at €224 per tonne. The March contract closed €2 lower at €228,25 per tonne. On the CBoT, the December wheat contract closed 3,9% lower at $5.91¼ per bushel. The March contract was trading 3,5% lower at $6.09½ per bushel. Corn moved more sideways and the March contract closed 0,8% lower at $4.81½ per bushel. Soy was on the rise last trading session, gaining 2,5% to $13.36 per bushel.
A major correction in the wheat price in Chicago last trading session does not come as a complete surprise to analysts. A series of orders from China last week totaling more than 1,1 million tons pushed prices to a four-month high last week and made U.S. wheat relatively expensive compared to supply from other parts of the world. The lack of new orders from China yesterday was a sign for traders and speculators to take a step back. Weekly exports in the US, at 282.000, were neatly in line with trade expectations.
In Europe, players on the wheat market are not concerned about developments in America. In fact, the good grain harvest in Ukraine, which the Ukrainian Ministry of Agriculture announced yesterday, tempered expectations. Tenders from Tunisia, Algeria and to a lesser extent Bangladesh could give the Matif some more direction, according to some analysts. Last week, EU exporters proved too expensive compared to Ukraine and Russia in two Egyptian tenders.
New wind
In corn and soy, analysts mainly look at South America. The effect this has on the market is difficult to reconcile. Argentina had rain last weekend, which is considered favorable for soy, but it is mainly the inauguration of Javier Milei that makes the news. Experts do not expect Milei to cut export duties for agricultural products, but people are especially curious about what the rate of the peso will do when Milei unfolds its economic plans.
Soy growers in Brazil continue to worry. There have been showers in the far west and southern parts of the country, but in the central part where most soy comes from, it remained dry last weekend. Growers in Mato Grosso in particular are desperate for rain. In the south of Brazil, precipitation causes problems. Reports of direct water damage due to flooded plots are rare or rare. Due to the long wet period, disease pressure in soy is high. A source reports that Asian rust is found in soy on several plots in the south.
According to several analysts, the shortage or surplus of precipitation in Brazil is supporting the soy market. It is remarkable that corn actually does not experience any of this. After all, the first crop of maize suffers from the same problems at the start of the season. However, most corn in Brazil is grown as a follow-up crop to soy. Delays in soy have a direct impact on the yield potential of that corn.