Grain trading goes off the beaten track

The March wheat contract on the Matif closed €1,75 higher yesterday at €212,50 per tonne. On the CBoT, wheat also showed a plus, closing 1% higher at $6.0½ per bushel. Corn moved more sideways, losing 0,2% to settle at $4.47¼ per bushel. Soya closed deeper in the red. The March soybean contract fell 1,6% to $12.03¼ a bushel.

The Matif has found the bottom in the market, at least for the time being. Concerns about weak demand for European wheat on the global market and stiff competition from suppliers have not gone away, but the Matif is dropping to a level where players dare to enter again. Relatively little attention has been paid to the grain market for the course of the autumn and winter so far. It is of course still too early to make reliable statements about harvest expectations, but we can conclude that the winter grains do not emerge from the winter under ideal conditions. This was confirmed again this week in the Geoglam Crop Monitor. Large parts of Europe are colored yellow (see below).

In the north of Europe it is the wetness that causes problems, while growers around the Mediterranean would be happy with rain after a dry winter. In France, the EU's largest wheat producer, winter wheat has weathered the winter reasonably well so far. In the south of Russia there are concerns about wintering out. However, according to the Russian Ministry of Agriculture, 96% of the winter wheat area is in fair to good condition.

Interest from an unexpected source
In South America, it is the drought in Brazil that continues to cause concern among analysts. Brazilian soy nevertheless remains competitively priced. This is now also attracting the attention of buyers from the US, various sources report. It is quite unusual for North American buyers to visit Brazil, especially at this time of year. According to the sources, it concerns an order for three shiploads of soy from the chicken company Perdue Farms. It is the first time since 2019 that soy will be imported from the US from Brazil in January or February. The previous times were in 2004 and 2009.

Some analysts see this order as a sign that the drought damage to soy in Brazil could be better than expected. Among the various organizations that make crop forecasts, estimates of the Brazilian harvest varied considerably. One estimate is well below 150 million tons, while another still clings to a yield above 160 million tons.