Tension is increasing on the grain market. Despite reports that cannot exactly be seen as pushing up prices, the futures markets closed in the green. With the exception of wheat on the CBoT, by the way. Although there may be no reason to do so, traders and speculators appear to be taking a stand in the run-up to the Wasde report, which will be published tonight Dutch time.
The March wheat contract on the Matif closed €4,50 higher yesterday at €188,50 per tonne. The May contract recorded a plus of €3,50 to €192 per tonne. Wheat actually suffered slightly at the CBoT. The May contract closed 0,5% lower at $5.28½ per bushel on the Chicago exchange. Corn and soy were on the rise. The May corn contract closed 2,2% higher at $4.38 per bushel and soy increased 1,6% to $11.66¼ per bushel.
China has canceled an order for 130.000 tons of grain from the US. Rumors about this have already been circulating but were confirmed yesterday by the USDA. This is causing considerable unrest in the American market. China has committed serious volumes for delivery later this year. The fact that Chinese buyers are now fumbling with previously made agreements because the market has fallen does not give much confidence. What is a sales contract with China still worth?
Other bearish news for wheat came from Egypt. State buyer Gasc withdrew a tender for wheat yesterday. The most competitive tender for the tender came from a country that is located on the Black Sea but is not one of the usual competitive bidders. Bulgaria posted the lowest price in the Egyptian tender with, according to sources, $226 per tonne C&F (free). Traders on the Matif did not pay much attention to this given the increase. It is starting to look like the wheat market has reached its bottom.
An agreement is an agreement or not?
Soya is becoming a special story. China is the largest importer and in the first two months of this year the country imported significantly less soy. Chinese customs figures show that 13 million tons of soy were imported in January and February. That is 8,8% less than in the same months a year earlier. According to Reuters, imports are at their lowest point since 2019. Moderate margins at soy processors, transport delays, slow customs clearance and the Chinese New Year are cited as reasons for the smaller Chinese imports.
According to several analysts, the fact that grain prices - except for wheat on the CBoT - are on the rise is almost certainly due to the Wasde report that will be released tonight Dutch time. Fundamentally not much has changed. It could be that the negative mood has gone a little too far and that we are now seeing a correction. The immediate reason is that a somewhat bullish tone is expected for corn and soy in the March edition of the Wasde report. Smaller stocks are predicted for both crops by participants in a Bloomberg poll. In addition, participants also expect significant adjustments in the harvest forecasts for Brazil by the USDA.